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What is a SIPP?

Date: 04 November 2025

4 minute read

A SIPP (Self Invested Personal Pension) is a type of pension that gives investors more control over their retirement savings, by offering a wide range of investment options. You can make these investment decisions yourself, or you can engage a financial adviser to do this for you. You can also set up a SIPP alongside an existing pension, if you wish.

SIPPs work well for people who want greater flexibility in their pension investments, including options that go beyond traditional funds, such as:

  • Commercial property – which can include the property that the investor’s own business operates out of
  • Discretionary fund management portfolios – where a discretionary investment manager looks after the investor’s money in line with a bespoke strategy
  • Investments – such as equities, investment trusts, government bonds, exchange-traded funds, and more

Tax treatment

As SIPPs are pensions, they offer the same tax benefits as other pensions:

  • Investments within a SIPP grow free of UK income tax and capital gains tax
  • Personal contributions into a SIPP benefit from income tax relief. Basic-rate taxpayers receive 20%; and higher-rate and additional-rate taxpayers can claim back more
  • Employers can pay in contributions to SIPPs on behalf of their employees (although they may not be obliged to do so)

Who are SIPPs for?

SIPPs are suitable for several different types of investors – for example:

  • Experienced investors who want to manage their own money, are confident in their ability to do so, and have the time to dedicate to it
  • Company owners who need to arrange their own pension savings, and at the same time, want to use their pension to buy their company’s premises
  • High-net-worth individuals who want to invest their pension money in line with the same strategy as the rest of their wealth

To bring this to life, we can look at a couple of scenarios.

Laura – business owner
Laura’s telecommunications business operates out of an office block. She sees the office rent going out of her business account every month. Having also experienced rent hikes in recent years, she now wants to look at other options. Her financial adviser tells her that her SIPP can borrow up to 50% of its net value in order to buy the office block. By doing this, Laura removes the risk of rent hikes and lease termination. The business will also be paying its monthly rent into Laura’s SIPP, thus growing her pension fund over time.
The Grant family – accrued wealth across multiple holdings
The Grants have accrued wealth across various different holdings over the years, and they now want this all to be managed in line with one strategy. To facilitate this, Mr and Mrs Grant have enlisted the services of a discretionary investment manager, who has designed a bespoke investment strategy tailored to their needs and objectives. The Grants make the decision to switch their existing personal pensions into SIPPs, which can be invested in the same strategy as the rest of their money – something their existing personal pensions can’t facilitate. They also take the opportunity to set up junior SIPPs for their children, enabling them to build up pension savings that can also be invested in line with their bespoke strategy.

Key considerations when choosing a SIPP

There are some important points to consider if you are thinking about investing in a SIPP.

  • Fees: Look at how much the SIPP will cost (both in one-off charges at the outset, and on an annual basis) – this will have an impact on the size of your pension funds over time
  • Investment risk: The investments held in a SIPP are not guaranteed. Investments can go down as well as up – you will need to take this into account, particularly if you decide to select your own SIPP investments
  • Complexity and time commitment: If you choose to manage your SIPP investments yourself, this can be time consuming. It takes time to understand investments and the market, as well as to decide on and implement any changes to your investment strategy over time

In summary

SIPPs offer control and flexibility over your pension savings, with access to a wide range of investments and valuable tax benefits. Whether you're an experienced investor, a business owner, or looking to align your pension with a broader wealth strategy, a SIPP can be tailored to suit your goals. For those seeking a more personalised approach to pension planning, a SIPP could be a potentially effective option.

This material is not tax, legal or accounting advice and should not be relied on for tax, legal or accounting purposes. Quilter Cheviot Limited does not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting adviser(s) before engaging in any transaction.

Tax treatment varies according to individual circumstances and is subject to change.

Approver: Quilter Cheviot Limited, 05 November 2025

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