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The IC guide to Sipps

A Sipp can be a good way to build up long-term financial security
The IC guide to Sipps

Key Points:

  • A self-invested personal pension (SIPP) is a pension ‘wrapper’ that holds investments until you retire and start to draw a retirement income
  • Sipps enjoy the same tax benefits as a standard personal pension
  • You can use them to invest in many different assets

A pension is a long-term saving plan with tax breaks from the government that is available in a number of forms, such as workplace schemes, advised personal pensions or a self invested personal pension (Sipp). You can contribute up to £40,000 into your pension every year, free of income tax. If you earn less than £40,000 a year, you can only contribute as much as you earn each tax year, or £3,600, whichever is greater. 

With workplace pension schemes you pay straight into your pension without paying tax. With personal pensions such as Sipps 20 per cent is automatically added to your savings, and higher and additional-rate taxpayers can claim their additional tax of 20 per cent or 25 per cent back in their tax return the following year.

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