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What is a SIPP?

What is a SIPP pension?

The term 'SIPP' stands for Self Invested Personal Pension. A SIPP is a type of personal pension scheme that is registered with HM Revenue & Customs in the UK.

With a SIPP, you are in control of the decision making for your pension, rather than being controlled by an old employer or insurance company.

Why use a SIPP?

A SIPP generally provides you with a greater amount of control and flexibility over the money in your pension than a typical employer pension or insurance company pension.

It gives you the freedom and flexibility over how you withdraw your money and the option to choose the investments within your pension.

SIPP features

SIPP control

Control

You are in total control of your pension and your retirement.
SIPP flexible

Flexibility

A SIPP is flexible when deciding how and when to take withdrawals.
SIPP tax free growth

Tax free growth

The investments in your SIPP will grow free of any income tax or capital gains tax.
SIPP access from age 55

Access

You can start making withdrawals from your SIPP once you reach age 55.

How much can I withdraw from my SIPP?

A SIPP gives you freedom and flexibility over the withdrawals from your pension. You can take up to 25% of your SIPP as a tax free lump sum. You can take this all at once or in stages over your retirement.

The remaining 75% can be used to draw an income or to purchase a guaranteed income for life, such as an annuity. The most common option is to keep your pension invested and draw a regular income or lump sums, this is known as income drawdown.

You get to decide how much you withdraw from your SIPP, how often you make the withdrawals and whether you take them as a tax free lump sum or income.

 Find out more about your pension withdrawal options

Income payments from SIPP will be subject to tax in the UK, unless you live in a country that has a double tax treaty with the UK, and the treaty specifies that UK pensions will be subject to tax in your country of residence.

The UK has double tax treaties with over 100 countries and you will have to apply to HMRC to get your pension paid without the deduction of UK tax.

What can a SIPP invest in?

SIPPs tend to allow a much larger range of investments and control compared to employer pension schemes. Under current HMRC rules, you are allowed to invest into a wide range of assets through a SIPP, such as:

  • UK and Overseas Shares
  • Government and corporate bonds
  • Exchange traded funds
  • Collective investments such as mutual funds
  • Investment trusts
  • Fixed deposits

Your pension fund will generally grow tax free, as there is no income tax or capital gains tax on the investment held by your SIPP, as with all UK registered pension schemes.

MyExpatSIPP provides you with an online dealing account for your SIPP, enabling you to buy and sell investments online.

How much can I contribute to a SIPP from overseas?

Payments into the SIPP are known as contributions and can be made by you, your employer and other third parties. A transfer from another pension into a SIPP is not treated as a contribution.

There is no restriction on the amount you can contribute to your SIPP, however contributions in excess of your Annual Allowance will attract tax charges.

You will normally receive tax relief on your personal contributions if you’re a UK resident. Non-UK residents can obtain tax relief on their contributions, but only in limited circumstances. You must have been both:

  • A member of the SIPP when you were previously UK resident, and,
  • Resident in the UK in one of the previous five tax years

Non-UK residents with no relevant UK earnings will receive tax relief on contributions up to £3,600 each tax year only.

The UK Pension solution for non-UK residents

Do I need a Financial Adviser to set up a SIPP?

You do not have to take financial advice to set up a SIPP. Our SIPP, allows you to set up your SIPP and transfer your pensions without having to use a financial adviser.

This means you decide whether a SIPP is right for you and you are in total control of managing your pension. We provide you with all the guidance, support and tools you need to be able to make your own informed decisions.

If you do decide to use an offshore financial adviser to set up and look after your SIPP, make sure you're fully aware of the fees and commission that is taken from your pension. Often SIPPs set up through offshore financial advisers will have ongoing fees of between 3%-5% per year.

You should compare the costs and benefits of managing your own SIPP against paying fees and charges to a financial adviser.

Do I need Financial Advice for my UK Pension?

What happens to a SIPP on death?

A SIPP provides a great deal of flexibility when it comes to the options for your pension in the event of your death.

Upon your death, your SIPP is normally paid to your beneficiaries. You can nominate who you would like as your beneficiaries, however the scheme trustees will have final discretion over who your SIPP is paid to.

The beneficiaries can choose what they want to do with the SIPP. They can withdraw the whole amount, choose to take regular withdrawals, or they can leave the pension invested and untouched.

If your death occurs before age 75, withdrawals from your SIPP will be tax free for the beneficiary. If your death occurs after you turn 75, then withdrawals will be subject to UK income tax rules.

What is the structure of a SIPP?

A SIPP is a trust based pension meaning the pension scheme is governed by a trust deed and rules. The assets of the pension scheme, i.e. your investments, are held by the pension scheme trustees.

The trustees are responsible for operating and administering the pension scheme however they will often appoint a separate scheme operator to administer the SIPP.

This structure means that your pension fund investments are separate to the assets of the pension scheme operator. Therefore in the event that the pension scheme operator company became insolvent, your investments would be completely separate and protected.

Why transfer your pension to MyExpatSIPP?

Transfer your pension to MyExpatSIPP

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