If you’re self-employed, taking a career break, or simply don’t have an employer pension scheme, a SIPP (Self-Invested Personal Pension) is a fantastic way to take control of your retirement planning.
Not only does it offer tax benefits, but it’s also not liable for inheritance tax, and you can draw down at an earlier age.
Tax Benefits of a SIPP
One of the most significant advantages of a SIPP is the tax relief you receive on your contributions. You can claim tax relief on your contributions at your marginal rate, meaning that for every £1 you contribute, the government will contribute an extra 20p for basic-rate taxpayers or 40p for higher-rate taxpayers. This means that if you contribute £8,000 to your SIPP, you will receive a total contribution of £10,000.
Inheritance Tax Benefits
Another advantage of a SIPP is that it’s not liable for inheritance tax. This means that when you pass away, your SIPP can be passed on to your beneficiaries without being subject to any inheritance tax.
Early Drawdown Options
With a SIPP, you can access your funds at a younger age than with other pension schemes. You can start to draw down from the age of 55, and you can take up to 25% of your pension tax-free. The remaining 75% can be drawn down as taxable income, either as a lump sum or a regular income.
In summary, a SIPP is an excellent investment for your future. It offers tax benefits, is not liable for inheritance tax, and provides early drawdown options. Take control of your retirement planning today and consider opening a SIPP.
Here are two official links with more information on SIPPs:
The government’s official website provides information on SIPPs, including eligibility, tax benefits, and early drawdown options:
The Financial Conduct Authority (FCA) provides guidance on SIPPs, including risks and things to consider before opening a SIPP account: