What is a SIPP? How does it work?

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 account, 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 account 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.

How much we can 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.

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 account, 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.

MyExpatSIPP provides an online service designed for Expats and non-UK residents to manage their pension & investments in the UK. SIPP, ISA and GIA accounts