Watch our video for an explanation on what a SIPP is and what you can invest in.
Video transcript - what is a SIPP?
So, what are self-invested personal pensions? Self-invested personal pensions (or SIPPs) are designed for people who want to take control over how their pension savings are invested. The investments in your SIPP will grow free of income tax and capital gains.
You can invest with your own money, through your employer, or you can transfer from an existing pension. With SIPPs you decide how much you want to invest. Self-invested personal pensions give you the opportunity to invest in a range of assets; including unit trusts, shares, cash or open-ended investment companies.
The great thing about a SIPP is that for every £800 a UK tax payer saves, the government gives you tax relief, effectively boosting your savings by £200, giving you a total contribution of £1,000. And if you are a higher rate tax payer, you may claim more tax relief through your annual tax return.
If you are considering transferring to a SIPP, it may be sensible to talk to an authorised financial adviser before making a decision.
The rate at which you can receive tax relief depends on the rate of Income Tax that is applied to your earnings, which will vary depending on the amount you earn and where you are resident for tax purposes. Rates of tax relief for Scottish Residents may differ to the rest of the UK.