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SIPP tax relief


SIPP Tax Relief

Learn more about SIPP tax benefits and how pension tax relief works.

How does pension tax relief work? 

You get tax relief on any money you personally pay as net into your SIPP, meaning you effectively reclaim the income tax that you would have paid on your pension contributions. All basic rate tax relief will be handled by your pension provider. This means that for every 80p you pay in, your provider will reclaim 20p, rounding your investment up to £1. If you are a Scottish or Welsh taxpayer, your pension provider will claim tax relief up to 20%, and you can claim an additional 1% from HMRC. 

Higher rate taxpayers can claim up to an additional 20% through their self-assessment tax returns. This means that for every 80p you contribute, your SIPP provider will claim 20p, and you can also claim up to 20p – so you can save £1 in your SIPP for as little as 60p. However, if you are a high earner you may be subject to a tapered annual allowance, and could face an annual allowance charge if you save more than your allowance. 

If you are a non-taxpayer, you can still qualify for tax relief. You can contribute up to £2,880 a year, and receive tax relief of £720, giving you a total of £3,600. 

Benefit from tax-free pension savings.
Open a SIPP by 31 July 2020 and pay no SIPP fee until April 2021. Terms apply

open a SIPP   transfer your pension

Claiming your tax relief

The level of tax relief you will receive depends on the level of tax you pay. We will always claim the first 20% for you, and add it to your account. You can claim back additional tax relief via your self-assessment tax return. 

Your rate of tax

What we claim

What you can claim




Scottish / Welsh









SIPP Annual Allowance

You can pay up to 100% of your earnings into your SIPP (subject to a maximum of the current Annual Allowance of £40,000 gross) and receive Tax Relief up to that level. This means that in most cases, you can pay up to £32,000 net into your SIPP each year. 

If you have a threshold income of £200,000 or more, you may be subject to a tapered annual allowance. Your annual allowance will reduce by £1 for every £2 that your ‘adjusted income’ exceeds £240,000. The maximum reduction is £36,000 which reduces the annual allowance to £4,000 but only once your adjusted income reaches £312,000. Find out more about Tapered Annual Allowance

The SIPP Carry Forward rule explained

You might be allowed to exceed your annual allowance if you have not used up your full allowance in any of the past three years. This is called ‘SIPP carry forward’. To be eligible, you must have: 

  • been a member of a pension scheme in each tax year from which you carry forward.
  • used up your full annual allowance in the current tax year.
  • contributed less than £40,000 in one or more of the last three tax years. (including personal and employer contributions.)
  • earned at least the amount you are contributing in that tax year, if you are making personal contributions.

You can take advantage of pension carry forward if you meet these rules.

What is MPAA and how does it get triggered? 

Once you have started to drawdown income from your self-invested personal pension, the amount you are able to contribute to your SIPP and claim tax relief on is reduced. This is called the Money Purchase Annual Allowance (MPAA). The MPAA for this tax year is £4,000. The MPAA will not be triggered if you take a lump sum from your SIPP but do not take any drawdown income, or if you use your tax-free lump sum to buy a lifetime annuity that stays the same or increases.

What is the lifetime allowance?

The lifetime allowance is the maximum amount you can contribute to your SIPP over your lifetime. The figure is currently £1,073,100. You will have to pay tax on any money you hold in your SIPP above this total. The excess is taxed at 25% plus income tax if you take it as income, or 55% if you take it as a lump sum. 

What happens if your income is over £240,000?

If you are a high income individual, you may be subject to a tapered annual allowance. This may apply to people with a threshold income of more than £200,000, and an adjusted income in excess of £240,000. 

Your threshold income is your annual income before tax, less any personal pension contributions and ignoring any employer contribution. If this is over £200,000, you will need to check your adjusted income. Your adjusted income is worked out by taking all income that you are taxed on including dividends, savings interest and rental income - before tax - plus the value of your own and any employer pension contributions. 

Your annual allowance will reduce by £1 for every £2 that your ‘adjusted income’ exceeds £240,000. The maximum reduction is £36,000 which reduces the annual allowance to £4,000. This only applies once your adjusted income reaches £312,000.

View Tapered Annual Allowance table

What happens if you've already taken money out of your SIPP? 

If you have already begun to take money out of your SIPP, the Money Purchase Annual Allowance (MPAA) may apply. The MPAA reduces the amount of money you can contribute to your pension and receive tax relief on to £4,000. The exception is if the money you have taken from your pension has been used to purchase a lifetime annuity. 

Open a SIPP by 31 July 2020 and pay no SIPP fee until April 2021.

This means your service plan fee of £9.99 covers you for all of your investment accounts. Following the offer period, the ii SIPP fee is only £10 a month more, and could save thousands compared to other pension providers who charge a percentage fee.  Terms apply

open a SIPP   transfer your pension

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.