Invest through a SIPP

When you contribute to a SIPP, you should be eligible for pension tax relief: the more tax you pay (or owe), the more tax relief you could receive. Most UK residents under the age of 75 should qualify, although there are restrictions as to how much you can contribute.

20% basic-rate tax relief is added automatically: you make a payment of £8,000 and the government adds £2,000, so £10,000 is invested in your SIPP. The basic-rate tax relief payment normally takes 6 to 11 weeks to be credited to the SIPP.

Higher and additional-rate taxpayers can claim back more – up to a further £2,000 (20%) and £2,500 (25%) respectively via their tax return.

So, a £10,000 pension contribution could effectively cost a higher-rate taxpayer as little as £6,000 and an additional-rate taxpayer as little as £5,500.

Even children and non-taxpayers qualify for basic tax relief: they can make a payment of up to £2,880 each tax year, to which the government adds £720, to give a total SIPP contribution of £3,600.

Note: Scottish taxpayers are subject to different rates of tax and can benefit from different levels of tax relief, although they will automatically receive the 20% basic rate relief.

Any funds you contribute or transfer to the Wealth Club SIPP will be invested in the Managed Portfolio you choose.

Please see the Schedule of Charges in our Terms and Conditions. There are no set-up or transfer-in fees. There is a fixed annual administration charge of £75, as well as the investment charges for the Managed Portfolio you choose, as listed in the relevant Factsheet. These include an ongoing manager fee, an ongoing custody fee, dealing fees and, where applicable, underlying fund fees.

The general rule is that UK residents aged under 75 can contribute tax efficiently up to as much as they earn to their SIPP each tax year, subject to an Annual Allowance.

The Annual Allowance is the maximum that can be contributed to one’s pensions in a tax year before incurring a tax charge. It is currently £60,000 for most people, and in some cases you can carry forward unused allowance from previous years, but there are three main exceptions.

1. Non-earners and non-taxpayers

You can make a payment of up to £2,880 each tax year, to which the government adds £720, to give a total SIPP contribution of £3,600.

2. Investors who have already taken cash from a pension using the pension freedoms

If you have taken cash from a pension (in one go or as smaller lump sums), the annual allowance is generally £10,000. This is called the ‘Money Purchase Annual Allowance' (MPAA). Once your annual allowance is reduced to £10,000, you won’t be able to carry forward any unused allowances from previous tax years. Download our Factsheet on the Money Purchase Annual Allowance »

3. Some higher earners

You may not be able to use the full £60,000 annual allowance and potentially be restricted to contributing as little as £10,000 a year.

This might affect people whose ‘adjusted income’ in the tax year exceeds £260,000.

Broadly speaking, adjusted income is any income – from employment, property, investments, etc – PLUS any employer pension contributions and those deducted from your gross pay LESS any taxed lump sums or death benefits.

If you are affected, your annual allowance for the tax year reduces by £1 for every £2 of adjusted income above £260,000. This is called the ‘tapered annual allowance’. If you have an adjusted income of £360,000 or more you will have an annual allowance of £10,000. Download our Factsheet on the Tapered Annual Allowance »

You should, however, be able to carry forward if you have any unused allowance from previous years. Download our Factsheet on Pension Carry Forward »

The rules around the tapered annual allowance are complex and this is only a summary. You can read more on the HMRC website. If in doubt, please seek specialist advice.

The minimum investment in the Quality Shares Portfolio is £10,000 gross. The minimum investment in the Wealth Club Portfolio Service is £100,000 in aggregate (across SIPP, ISA and GIA).

Carry forward could allow you to use any leftover allowance from the past three tax years to make a larger pension contribution (in excess of the standard annual allowance) in the current one.

To be able to carry forward, you must have had a pension in each year from which you are carrying forward (even if you didn’t contribute) and your earnings for the current tax year must be the same or greater than your pension contribution.

Broadly speaking, to calculate how much you can carry forward, you should look at the annual allowance you had, then subtract any contributions made into your pension in the current year and then in each of the last three tax years, starting with the earliest.

You cannot use carry forward if you have triggered the Money Purchase Annual Allowance.

Download our Factsheet on Pension Carry Forward »

This is a simplified explanation – for more details, including a carry forward calculator, please visit the HMRC website. If in doubt, please seek specialist advice.

You can transfer most types of UK "money purchase" pensions, including personal and stakeholder pensions, Retirement Annuity Contracts (RACs), other SIPPs and most paid-up occupational money purchase pensions.

We currently cannot accept transfers from pensions already in drawdown. Please let us know if you might be interested and we’ll let you know as soon as this becomes possible.

We cannot accept transfers from any pensions with Safeguarded Benefits. These are pensions with a defined benefit (DB) element, such as a ‘final salary’ scheme.

To start a transfer, you simply provide the details of the pension you wish to transfer (the whole fund or just a part) when you complete your application to invest in one of our Managed Portfolios via a SIPP.

We will contact your existing provider and take care of the rest. There is no transfer-in fee.

Your pension will be transferred as cash, so you will be out of the market whilst the transfer takes place.

Before transferring, you should check with your provider that you will not lose valuable benefits or guarantees nor incur penalties or excessive exit fees. If unsure, you should seek advice.

If you were born after 5 April 1971, you should also ask your provider if the pension you’re transferring will allow you to take benefits from age 55 after the minimum retirement age rises to 57 in 2028. If so, this right may be lost when the policy is transferred.

Like all pensions, a SIPP is intended to provide for your retirement. The earliest you can take any money out – if you so wish – is currently age 55 (rising to 57 from 2028).

At that point, most investors should be entitled to take up to 25% of their SIPP as tax-free cash (this is technically called “Pension Commencement Lump Sum” or PCLS), usually subject to a monetary cap of £268,275 (Lump Sum Allowance or LSA, effective from 6 April 2024).

The Lifetime Allowance, first introduced on 6 April 2006, previously set the limit of total value that could be built up in pensions without incurring a tax charge. It has been abolished from 6 April 2024.

This means there are no longer limits on how large a pension you can build tax efficiently, but new rules have been introduced on the tax treatment of lump sums taken from a pension. From 6 April 2024, a new Lump Sum Allowance (LSA) applies. It limits the tax-free cash you can get from your pension to £268,275. Meanwhile, a second new allowance, the Lump Sum and Death Benefit Allowance (LSDBA) – also effective from 6 April 2024 – limits the total amount of tax-free cash you can take in your lifetime and you can pass on when you die to £1,073,100, in most cases.

There are, as always, exceptions. When the Lifetime Allowance was first introduced and each time its level has reduced over the years, investors have had the opportunity to apply for various forms of Lifetime Allowance protection.

So, if you have in the past applied for a form of Lifetime Allowance protection (you should have a certificate from HMRC to this effect or can check via your online HMRC account), you might be able to take 25% or more of your pension as tax-free cash, even if the amount exceeds the £268,275 cap. If you have protection, it could be sensible to take advice before making any decisions that could impact it.

There are three main ways to access your pension: you could take lump sums, draw an income (drawdown) or use the SIPP to buy an annuity. You can choose one or mix and match.

Anything you take over the 25% tax-free cash will normally be taxed like income at your marginal rate.

Currently, Wealth Club is working on making retirement options, including drawdown and lump sum options, available through our service. Whilst these are developed, investors wishing to access their SIPP would have to transfer it to a different provider first.

SIPPs can be passed on very tax efficiently.

When you die, your SIPP is not normally considered part of your estate and can therefore be passed on free of inheritance tax.

Your nominated beneficiaries can then decide whether to take it as a lump sum, take a flexible income – or no income – from it (drawdown) or use it to buy an annuity. As part of the application process, we will ask you to nominate your beneficiaries. This is simply to express your wishes and is not binding: it can be changed by you at any time.

If you die before your 75th birthday, your beneficiaries should be able to inherit your SIPP free of income tax, provided it is passed on (the technical term is “designated”) within two years of your death. Note: the Lump Sum and Death Benefit Allowance (LSDBA) may apply, limiting the total amount of tax-free cash you can take in your lifetime and you can pass on when you die to £1,073,100, in most cases.

If you die after your 75th birthday, your beneficiaries will normally have to pay income tax at their highest marginal rate on whatever they take out, either as income or lump sum.

Please note: the tax treatment is different if the beneficiary is not an individual or you leave your pension to charity.