Information and answers to frequently asked questions about SIPPs and the ii SIPP.

The following information is based on our understanding of HMRC regulations and may be subject to change. We cannot provide tax or pensions advice and recommend that, if in doubt as to how these various aspect may relate to your circumstances, you seek independent advice from a qualified adviser.

A Self-Invested Personal Pension (SIPP) is a type of Defined Contribution (DC) "money purchase"pension scheme. It is an account designed to help you build a pension investment portfolio, which is then used to provide you with money when you reach retirement.

The amount of pension fund you will have at retirement will depend on how much you contribute (pay in), the time it is invested for and how well the investments have performed. The performance of investments is not guaranteed and may fall as well as rise. This means that you could get back less than you have invested.

A SIPP provides the same tax-efficient pension benefits and flexible retirement options as other types of DC pensions, but the key difference is that it offers you the freedom to make your own investment choices from a huge range of potential investments.

The SIPP account can run alongside an occupational pension scheme if you are employed and want to make additional contributions that you control, or it can serve as a standalone alternative if you are self-employed.

If you are opening your own pension there are three options available:

  1. Stakeholder Pensions: These are typically offered by life insurance companies in accordance with minimum standards set by the government. They are the cheapest and most basic option, with low minimum contributions and capped charges. There is generally a default investment fund with only a limited range of other fund choices.
  2. Personal Pension Plans: These are also offered by life insurance companies and will have more features. Investment choices may still be limited to a range of the insurance company’s own funds, although some have now widened the range available to include funds from other mutual fund managers. These are generally more expensive than stakeholder pensions and you will have the ability to switch between different funds should you want to.
  3. Self-Invested Personal Pension (SIPP): A SIPP works in a similar way to a personal pension. The main difference is that they offer the most flexibility and control over the types of investments that can be held. For example, they are one of the few pensions which allow you direct access to stocks and shares, both in the UK and internationally.

You can transfer any of the following types of pension into a SIPP:

  • Personal Pension Plans
  • Pensions in drawdown
  • Other SIPPs
  • Executive Pension Plans
  • Free Standing Additional Voluntary Contributions (FSAVCs)
  • Small Self-Administered Schemes (SASS)
  • Stakeholder pension plans
  • Occupational Money Purchase Plans
  • Retirement Annuity Plans
  • Recognised Overseas Pensions schemes

We can also help with Defined Benefit Pension Plans, and others with 'safeguarded' benefits, where you have received advice to confirm it is in your interests to do so.

As you approach your retirement it can make good sense to get some impartial advice on your options. Pension Wise , a service funded by the Government, can help once you reach age 50. Whether a face-to-face meeting or a telephone appointment they’ll help you understand your options.

You can also draw up to £1,500 from your pension pot (in three amounts, each of up to £500 per tax year) to pay for financial advice.

Then, when you’re ready to start drawing on your pension, the SIPP enables you to choose from all the options introduced under the Government’s 2015 ‘pension freedoms’. You can:

  • Leave your SIPP intact until you need to draw on it.
  • Use all or part of it to purchase a guaranteed income via an annuity.
  • Take up to 25% of your pension value tax efficiently and draw a regular income. You can do this while continuing to manage your investments; this is known as Flexi-Access.
  • Take lump sums as and when you need them with 25% of each lump sum free of income tax and the remainder taxed at your prevailing rate.
  • Take all your pension pot in one go with 25% free of income tax with the remainder taxed at your prevailing rate.
  • Mix and match from these options to create the ideal solution , taking into account other pensions, income or savings and the amount of income you need.
  • You don’t need to be working to pay into the ii SIPP. You can contribute up to £2,880 each year and the Government will top that up to £3,600 through tax relief.
  • Once you’ve started taking a taxable income from your SIPP you can still make contributions of up to £4,000 each year that qualify for tax relief.
  • If you pay more into your pension than the annual allowance, a tax charge will be applied. It’s your responsibility to declare this on your self-assessment tax return
  • The earliest you can take benefits from your SIPP will increase from age 55 to age 57 in 2028
  • If you take a large income withdrawal from your pension, you might be given an emergency tax code – you may need to claim back tax from HMRC
  • When you start taking your pension make sure you let us have your tax notice so we can ensure only the right amount of income tax is deducted from each payment.
  • If you’ve other pension schemes alongside your SIPP, remember to tell each provider within 91 days of taking income. Failure to do so can lead to a penalty charge from HMRC.
  • With the ability for your survivors to inherit your pension pot - a tax-efficient way to pass it on - do keep your Expression of Wishes up to date so the Trustees have an indication of how you’d like your pension fund distributed.

As a tax free product, SIPP customers are entitled to the payment of interest/dividends in gross. However, some investments like Property Income Distributions(PIDs) from UK Real Estate Investment Trusts(REITs) are paid to us with a basic 20% tax rate already deducted.

How does this affect our customers?
Typically, PIDs are paid net to SIPP accounts and we then have to reclaim the tax back from HMRC. This will mean that the customer will initially receive their PID paid net onto their account and then Customers will receive all their tax back for the previous tax year around 5 months after the end of the tax year.

Why does it take so long?
Tax reclaims are submitted annually to HMRC by our SIPP Administrator, Barnett Waddingham.  This is done every April for the entire previous UK tax year, and is usually received around October.  

We will claim the basic rate of tax relief (20%) from HMRC. This will be credited to your SIPP between 6 to 11 weeks after you have made your contribution. We usually receive tax relief on or around the 25th of the month.

For Welsh taxpayers, the income tax rates in 2021/22 remain the same as those for English tax payers and so we will continue to pay Basic rate tax relief of 20%. 

For Scottish taxpayers, following the introduction of different tax bands and rates from 6 April 2018, the tax rates have been set for 2021/22. For those on starter or basic rates, we will claim pension tax relief of 20%. Where you are liable for income tax at the Scottish intermediate rate if 21%, HMRC has advised that we must continue to claim relief at 20% and you should claim the additional 1% tax relief through your self-assessment return. 

For all UK taxpayers who pay income tax at the higher rates (including Scottish tax payers), additional tax relief on your Self-Invested Personal Pension (SIPP) contributions should be claimed via self-assessment tax returns. This additional tax relief is not credited to your SIPP but is paid directly to you. 

Once the money purchase annual allowance (MPAA) is triggered your SIPP admin page will show the MPAA and how much of it you’ve used in your SIPP. But that’s not the whole story.

When you trigger the MPAA by flexibly accessing your ii SIPP (or any other money purchase/defined contribution pension), the maximum you can contribute and receive tax relief in that tax year is still limited by the annual allowance (AA). BUT, having triggered the MPAA, from that point, the maximum you can contribute is limited to the prevailing MPAA. So, for that tax year only, contributions both before and after that event need to be considered.

For the avoidance of doubt, only taking all of part of your tax-free lump sum (or PCLS) is not a trigger for the MPAA: taking taxed income via an UFPLS or taxed income via Flexi Access Drawdown does trigger the MPAA.

The general principle:

If the money purchase contributions made after triggering the MPAA don’t exceed £4,000, money purchase contributions and any defined benefit input amounts for the whole tax-year will be tested against the annual allowance as normal.

However, if money purchase contributions made after the trigger event do exceed £4,000, working out how much your tax charge will be is a lot more complicated, and you may need a financial adviser to help you.

At a high level, you’ll need to work out:

  • The amount that your money purchase and any defined benefit input amounts for the whole tax-year exceed the annual allowance. This gives you your ‘default chargeable amount’.
  • The amount that money purchase contributions made after the MPAA trigger event exceed £4,000 and the amount any defined benefit input amount for the tax-year exceed £36,000. Adding these two amounts together will give you your ‘alternative chargeable amount’

The amount you need to pay tax on will be the higher of your default or alternative chargeable amount.

The tax charge isn’t at a fixed rate. It can be charged in whole, or in part, at 45%, 40% or 20% depending on your taxable income for the tax year and the chargeable amount.

These calculations are not simple and we’d recommend you refer to a tax or financial adviser if unsure. Further information can also be found on the Pensions Advisory Service website.

Regular or one-off contributions to your SIPP may help to increase your income at retirement and bring you closer to your retirement goals.

You can carry forward any unused allowance from the previous 3 tax years.

If you have no UK earnings, or are earning less than £3,600 a year you can still pay contributions up to £2,880 and we will claim tax relief of £720.

Type of allowance




Annual allowance for tax relief

Up to £40,000

Up to £40,000

Up to £40,000

Annual allowance for tax relief once you have started taking taxable withdrawals




Lifetime allowance




NOTE: The annual Allowance is the maximum you can contribute to a personal pension and receive tax relief. The limit includes your contributions, any contributions made by your employer or any other third party and the basic rate tax relief we reclaim on your behalf. You can ‘carry forward’ any unused allowance from the previous 3 years but you do need to have sufficient ‘relevant earnings’ in that tax year to cover the total contributions made. For ‘additional rate’ tax payers with an ‘adjusted income’ of £240,000 or more, a ‘tapered annual allowance’ applies to both Defined Contribution and Defined Benefit pensions: please refer to your tax adviser or IFA for details. 

View Tapered Annual Allowance table

Carry forward guide

Tax Year


Annual Allowance

Current year



Carry forward year one



Carry forward year two



Carry forward year three



It is not normally possible to withdraw money from a SIPP before the age of 55 (57 from 2028).

If you have reached the age of 55 and are looking to start drawing benefits from your SIPP you should read our Income Drawdown page. You may also want to speak to Pension Wise, a free government guidance service, that can give you more information about your options.

Once you have decided how you want to draw your retirement benefits you need to complete the relevant benefit form found on the useful forms section of our website. If you need additional information about your options, or have any questions when completing the forms, you should call our customer services team on 0345 607 6001 between 7.45am and 4.30pm Monday - Friday.

The ii SIPP is aimed at clients who have sufficient knowledge and experience of investing to make their own investment decisions and want to actively manage their investments. A SIPP is not suitable for every investor. Other types of pensions may be more appropriate. The value of investments made within a SIPP can fall as well as rise and you may end up with a fund at retirement that’s worth less than you invested. You can normally only access the money from age 55 (age 57 from 2028). Prior to making any decision about the suitability of a SIPP, or transferring any existing pension plan(s) into a SIPP we recommend that you seek the advice of a suitably qualified financial adviser. Please note the tax treatment of these products depends on the individual circumstances of each customer and may be subject to change in future.

Open an ii SIPP today

Whatever your retirement goals, our SIPP could help you achieve them.

open a SIPP   transfer your pension