A SIPP, or self-invested personal pension, is a UK pension you open yourself and choose the investments for, with tax relief added to what you pay in.
This guide explains how SIPPs work in the UK, from tax relief to what happens when you die. It does not rank providers.
Whether a SIPP fits alongside your workplace pension, older pots or a final salary scheme depends on things only you can judge. To have an FCA-authorised adviser weigh them with you, send a brief enquiry via the form on this page; there is no charge for it.
What a SIPP is
SIPP stands for self-invested personal pension. MoneyHelper, the government-backed guidance service, defines it as "a type of pension you can set up yourself. It lets you save up over a number of years to give you money to live on when you’re older." What sets it apart is the investment choice: a SIPP "lets you decide how your pension money is invested – usually offering a wider selection than other pension types."
It is a pension first and an investment account second, so the scheme must be registered: GOV.UK says a pension scheme has to be registered with HM Revenue and Customs (HMRC) to qualify for tax relief. People sometimes call it a "SIPP wrapper" or a "SIPP account" because the pension is the container and the investments sit inside it.
It is also a defined contribution pension, so what it pays you depends on how much is paid in, how the investments perform, the provider's fees, and how and when you take the money. There is no promised income, unlike a final salary pension. See how the UK pension system works.
Where SIPPs came from
According to the Financial Conduct Authority (FCA), in its June 2026 consultation on SIPPs, "SIPPs were introduced in 1989 as an alternative to standard personal pensions", and "In 2006, all personal pensions became subject to the same rules on the types of investments people can hold." By 2024 "nearly a third of the assets under administration in FCA-authorised defined contribution pensions were in SIPPs".
"SIPP" now covers very different products. The FCA sorts them loosely into three kinds:
- Bespoke SIPPs, offering "non-mainstream and more esoteric investments such as derivatives" and "typically designed for experienced or highly engaged investors".
- Streamlined or simple SIPPs, offering "a broad range of mainstream funds".
- Ready-made SIPPs, offering "a limited range of preselected investments (such as target-date funds) or risk-rated model portfolios".
How that compares with an ordinary personal pension is covered in personal pension or SIPP.
How a SIPP works: paying in
MoneyHelper says "You can usually start a SIPP from age 18, or open one on behalf of someone younger – often for a child or grandchild", and that "You normally cannot start and pay into a SIPP after you reach age 75, unless you’re transferring across an existing pension." Saving for a child is covered in junior SIPPs, and starting late in starting a pension in your fifties or sixties.
Tax relief is added for you
A SIPP works on "relief at source". GOV.UK explains that the provider claims the 20% basic-rate relief from the government and credits your pot with it; all personal and stakeholder pensions work this way, and so do some workplace pensions. MoneyHelper's example: "a £100 contribution to your pension will cost you £80."
- Higher and additional rate taxpayers get 20% added, then, MoneyHelper says, "you’ll need to claim the extra tax relief yourself". At 40%, "a £100 pension contribution will cost you £60."
- Scotland has its own income tax bands. GOV.UK says that if your rate in Scotland is 19%, the provider still claims at 20% and you do not have to make up the difference. How relief works at the higher Scottish rates is in pension tax relief in Scotland.
- Low or no earnings. Relief is limited to what you earn: GOV.UK says it applies to contributions worth up to 100% of your annual earnings. MoneyHelper adds that if you earn under £3,600 you can still get tax relief on up to £2,880 of contributions. See tax relief with no earnings.
Staying within that limit is up to you. The full picture is in how pension tax relief works.
The annual allowance, and who else can pay in
GOV.UK puts the annual allowance for the 2026/27 tax year at £60,000, and says it covers all of your private pensions together if you have more than one. It counts what you or anyone else, an employer for example, pays into a defined contribution scheme in the tax year. Unused allowance and the tax charge are covered in the annual allowance guide.
Other people, including an employer, can pay into your SIPP; see employer contributions into a personal pension and paying into a partner's pension.
What a SIPP can invest in
You do not have to pick investments yourself. MoneyHelper says "Many SIPP providers will manage your money for you by default, so you don’t have to choose your own investments unless you want to." If you do choose, the typical menu is funds, company shares, government or corporate bonds, and commercial property and land, though "Your options will depend on what your provider offers".
Owning a shop, office or farmland through a pension is covered in SIPPs and commercial property, borrowing in SIPP borrowing rules, and the full list of what is allowed in what a SIPP can invest in.
What HMRC's rules penalise
Because the member can steer the investments, HMRC's Pensions Tax Manual treats a SIPP as an "investment-regulated pension scheme". If such a scheme acquires taxable property, meaning residential property or tangible moveable property, the manual adds that "this will create an unauthorised payment on the member whose arrangement acquires the asset", and "the scheme administrator will be liable to a scheme sanction charge".
In plain terms, homes and most physical objects bring a tax charge rather than a tax break; HMRC's guidance elsewhere puts it as "residential property and most tangible moveable assets". Ask the provider before buying anything unusual. The HMRC rules in more detail are in SIPPs and HMRC registration.
Non-standard assets and unusual investments
Shares in a private company, unregulated funds and other assets that are hard to value or sell are accepted by some SIPPs and not others. The FCA's June 2026 consultation says "many SIPPs are operated to a high standard", but that it has "seen a subset of firms with inadequate due diligence processes" and that "These weaknesses have led to consumer losses". It is proposing new rules on "due diligence requirements" and "handling pension scheme money and assets"; comments closed on 24 August 2026. No final rules had been published by 17 October 2026, so treat them as proposals.
Whatever the SIPP holds, its value can go down as well as up, and you could end up with less than went in. MoneyHelper: "All investments can rise and fall, so there’s always a risk you could get back less than you pay in." It adds that lower-risk investments "might be less likely to fall in value but your money will typically grow at a slower rate". See choosing where your pension is invested.
Who runs a SIPP, and how your money is protected
Behind every SIPP is a firm the FCA calls the SIPP operator, which runs the scheme; the consultation says such operators act "as both manufacturers and distributors" of the product. HMRC's rules also need a "scheme administrator", which is the party they make liable for charges such as the scheme sanction charge above. Who fills those roles for a given SIPP is a question for its own documents.
Before paying in, check the firm on the FCA's Firm Checker, which helps you confirm a firm's authorisation and the permissions it holds for what it offers.
Protection if a firm fails is narrower for SIPPs than for some other pensions. The Financial Services Compensation Scheme (FSCS) says "some types of pension products such as SIPPs are typically deemed ‘uninsured’ pension schemes. These will not be covered in the same way or to the same extent as those deemed ‘contracts of long-term insurance’." Its limits, read on 17 October 2026:
| What fails | What the FSCS says it can pay |
|---|---|
| The SIPP operator | "we can pay up to £85,000 per eligible person, per firm" |
| A UK-regulated provider of an investment held in the SIPP | "compensation up to £85,000 per pension scheme member" |
| A UK-regulated adviser who gave bad pension advice and has failed | "compensation up to £85,000" |
These limits are about firms failing: you may be able to claim when "the provider or adviser has gone out of business", which is a different thing from investments losing value. How a particular SIPP is covered is a question for its provider.
Taking money out of a SIPP
A SIPP pays out like any other defined contribution pension. MoneyHelper says the earliest you can take your pension is usually age 55, rising to 57 from April 2028, except where poor health means retiring early. Exceptions are on when you can take your pension.
When you are ready, the choices are taking up to 25% as tax-free cash and then leaving the rest invested until you need it, converting it into guaranteed income, setting up a flexible income you can stop or change at any time, or taking the rest as one or more lump sums. Across all your pensions, tax-free cash is capped at £268,275 for most people, GOV.UK's lump sum allowance as read in October 2026. Each route has its own guide: pension drawdown, annuities, taking lump sums as you go, and the overview in your options at retirement.
Two rules catch people still saving. Once you take taxable money flexibly from the pot, MoneyHelper says the £60,000 limit then reduces to £10,000, a cut explained in the money purchase annual allowance. And taxable withdrawals count as income for the year; taking large amounts from your pot might push you into a higher rate of tax.
Pension Wise gives free guidance on these choices: "If you’re 50 or over, you can also get a free Pension Wise appointment". For a recommendation that weighs your SIPP against your other pots, tax and plans, you can reach an FCA-authorised adviser through the form on this page.
Moving other pensions into a SIPP
SIPPs are often used to bring older pots together; the FCA's June 2026 consultation reports feedback on "The increasing use of SIPPs as consolidation vehicles". GOV.UK says a UK pot can move to another registered UK scheme, while a transfer anywhere else is an unauthorised payment that you pay tax on. It also warns that transferring can bring a fee or cost you rights: an age at which you could take the pension, a protection, or tax-free cash above 25% of the pot. The steps are in how to transfer a pension and the question of whether it is worth it in moving a pension into a SIPP.
A final salary or other defined benefit pension is a different decision. The FCA says: "The FCA and The Pensions Regulator (TPR) believe it’s in most people’s best interests to keep their DB pension. You can’t reverse a transfer". Where safeguarded benefits have a transfer value above £30,000, regulations on legislation.gov.uk require appropriate independent advice first. See transferring a final salary pension; many public sector schemes have rules of their own, such as the NHS Pension Scheme.
Transfers are also where pension scams operate. On an unsolicited call about your pension, the FCA says to put the phone down, calling it illegal and probably a scam, and not to accept advice from whoever rang. GOV.UK adds that HMRC registration of a scheme is not a government endorsement. Read the FCA's guide to pension scams and how pension scams work before moving anything.
Whether consolidating helps depends on what each old pension carries with it. An FCA-authorised adviser can compare them side by side, and the form on this page is quick to complete.
A SIPP or something else?
MoneyHelper's view is blunt: where you have an employer, its workplace pension usually beats a SIPP unless you want a separate pension on top, since the employer usually pays in as well and charges are often lower. You can hold both. Other alternatives have their own pages:
- A standard personal pension or stakeholder pension. The same guidance presents stakeholder pensions as the option with a charge cap, small minimum payments and no transfer fee. See personal pension or SIPP and stakeholder pensions.
- Paying more into a workplace scheme, or an AVC. See paying extra into a workplace pension and what an AVC is.
- An ISA or Lifetime ISA. These are not pensions and follow their own rules; see pension or ISA and Lifetime ISA or pension.
- A SSAS, a small self-administered scheme, which is a different structure; see SIPP or SSAS.
MoneyHelper says the main differences between SIPP providers are their charges and the range of investments they offer, so it advises shopping around. How charges work is in pension charges, and the pros and cons in are SIPPs worth it.
What happens to a SIPP when you die
Money left in a SIPP can pass to the people you name. Under the current rules, MoneyHelper says that if you die before 75 your pension can usually be inherited tax-free, as long as "the money is paid to your nominated beneficiaries within two years of your pension provider being aware of your death" and the total taken as lump sums is within the lump sum and death benefit allowance (£1,073,100 for most people). Otherwise, including if you die after age 75, MoneyHelper says the beneficiary normally has the inherited amount counted with their other income.
Inheritance tax is changing, and the change is law. The Finance Act 2026, which received Royal Assent on 18 March 2026, treats a member of a registered pension scheme as beneficially entitled, immediately before death, to what is left in the pot (section 66), so it counts for inheritance tax; section 71 applies this to deaths on or after 6 April 2027. See pensions and inheritance tax, and choosing a pension beneficiary and pension death benefits.
SIPP questions people ask
Can anyone have a SIPP?
Within the age limits above, usually 18 to 75 for paying in, yes. Tax relief also needs you to be a "relevant UK individual": HMRC's manual includes anyone with "relevant UK earnings chargeable to income tax" or resident in the UK that tax year. You do not need earnings to hold one, but relief is limited to what you earn, with the £2,880 floor described above.
Can I close a SIPP or take all the money out?
Not before the minimum pension age, outside the ill-health and protected-age rules; the FCA warns that a scheme offering early access before 55 is "almost certainly a scam". From that age you can take everything as cash, though everything beyond the tax-free part is added to that year's taxable income; see your options at retirement. You can also close a SIPP by transferring it to another registered scheme.
What happens to my SIPP if I leave the UK?
The SIPP stays a UK pension under UK rules. HMRC's manual says someone no longer resident remains a relevant UK individual if they were UK resident "at some time during the five tax years before that year" and when they joined, and may also qualify for tax relief on contributions up to the "basic amount" of £3,600. Whether you can keep the SIPP or pay in is the provider's decision, and you would need advice in your new country too; see moving abroad with a pension and QROPS.
Can I open a SIPP for my adult children?
An adult opens their own SIPP, but you can pay into it: GOV.UK says that when someone else pays into a pension, the member gets relief at 20% through relief at source. It counts towards their annual allowance, not yours. For children under 18, see junior SIPPs.
Which is the best SIPP in the UK?
We do not rank providers, and MoneyHelper notes that whole-of-market comparison sites for pensions do not exist. What differs is the charges and the range of investments each offers. Choosing a SIPP provider covers how to compare them.
Is a Vanguard, Fidelity or Hargreaves Lansdown SIPP different from other SIPPs?
The rules on this page apply to any SIPP. Each firm's charges, minimums, cash interest and investment range are in its own documents, so check them before you choose; see Vanguard SIPP fees, Fidelity SIPP fees, Hargreaves Lansdown SIPP fees and the Interactive Investor SIPP.
Your next step
A SIPP is a personal pension with a wider choice of investments, and the investment decisions and risks are yours. If you are deciding whether to open one, move pots into one, or how it fits with a workplace or final salary pension, the form on this page will bring an FCA-authorised adviser into contact with you to talk it through.
Sources: MoneyHelper, SIPPs explained (archived copy); GOV.UK, Tax on your private pension contributions; GOV.UK, Transferring your pension; HMRC Pensions Tax Manual, PTM044100, PTM125100 and PTM125200; FCA, CP26/20 (June 2026); FCA, Pension scams; FCA, Considering a defined benefit pension transfer; FSCS, Pension protection; Finance Act 2026, sections 66 and 71.