A self-invested personal pension (SIPP) is referred to as a ‘wrapper’ pension and is a UK government-approved personal pension scheme. A SIPP allows you to make your own investment decisions which sets them apart from other pensions.

What is a SIPP?

A self-invested personal pension (SIPP) is a pension that holds an investment until you retire and draw an income, similar to a standard personal pension.

A SIPP offers more flexibility than a standard personal pension, giving you more control over the investments you can choose.

A standard personal pension is managed for you and investments are decided by the fund you have chosen. With a SIPP you can choose and manage your own investments or pay for an authorised investment manager to do it for you.

The investments that are allowed depends on the SIPP but some of the more common investments include:

  • Commercial property
  • Unit trusts
  • Traded endowment policies
  • Investment trusts

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Who is a SIPP suitable for?

A SIPP is more suited to a seasoned investor as they will be responsible for dealing with and switching their investments. For those who are less experienced, having an qualified financial advisor to manage your SIPP is highly recommended. Holborn’s advisors are able to discuss your options with you and make sure you invest wisely.

One of the main draws of a SIPP is the flexibility it gives to invest in areas of your choice. For those with investment experience it is an attractive option that allows them to maximise their investment potential.

SIPPs usually have higher charges than other pensions which is why they tend to be more suited to larger funds.

A SIPP is a great option for those looking to leave something to their family when they die. If you die before you turn 75, the beneficiaries could choose to take their share of the money as a lump sum or keep it invested and make withdrawals as required. This means there would be no Inheritance Tax (IHT) and no income tax to be paid by the beneficiaries.

If you were to die after the age of 75, income tax would be applied on any withdrawals made by the beneficiaries’ at their marginal rate. However, there would still be no requirement to pay IHT.

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    How are SIPP withdrawals taxed?

    In the UK, 25% of every cash withdrawal from a pension is tax-free. If you are classed as a non-UK resident for tax purposes, your pension will be taxable in your country of residency.

    It is possible for Cyprus residents access a QROPS or UK pension lump sums tax free. If this is not possible, pensions in Cyprus are taxed at either a flat rate or scale income tax rates. The flat rate is 5% with a €3,420 allowance or a scale between 20% and 35% with a €19,500 allowance.

    You may also be interested in

    SIPP: when can I withdraw?

    At 55 you can start making withdrawals from your SIPP. This is the same age threshold applied to withdrawals on all personal and workplace pensions.


    Tax rates, allowances and reliefs are as at May 2019 and are subject to change in the future. The benefit of any allowances and reliefs depends upon your personal situation and may also change over time.

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