The 2024-25 tax year ends at midnight on 5 April, so you still have time to open and start paying into a self-invested personal pension (SIPP) – or increase your contributions if you haven’t yet reached your annual allowance.
To help you make the most of the opportunities, here’s a checklist of everything you need to know about SIPPs.
1. A SIPP puts you in control
A SIPP is a type of personal pension that offers a flexible way to save for retirement and gives you more control over how your money is invested.
2. A SIPP can complement your current workplace pension
Most employers offer a company pension. By law, your employer must pay in a minimum of 3% of your ‘qualifying earnings’1 into your workplace pension, with an additional 5% coming from you (including tax relief). Some employers will match any additional contributions you make. But if they don’t, a SIPP can help with your additional pension saving needs. It could also give you access to more suitable investments.
3. A SIPP can help you organise your other pensions
Most people are likely to work for several employers during their careers, accumulating different pensions along the way. Bringing them together in a single pension pot can give you a clearer view of your savings and make it easier to know whether your retirement plans are on track2. Consolidating your pensions in a SIPP early on can save on paperwork later in life and ensure you don’t lose track of pensions as you grow older.
4. Contributing to a SIPP has tax benefits
Like most other pensions, SIPP contributions benefit from tax relief from the government. For every £80 you contribute, you’ll get a top-up of £20. If you’re a higher-rate or additional-rate taxpayer, you can claim back an additional £20 or £25, respectively, via your self-assessment tax return.
Your investments are also sheltered from capital gains tax (CGT) within a SIPP.
5. Tax relief is subject to an annual allowance
Under current regulations, the most you can pay into your pensions each year and receive tax relief on is £60,000 or 100% of your gross relevant earnings3, whichever is lower. This applies across all your pensions, including your SIPP. For those with higher incomes, the £60,000 limit may be reduced4. Those without earned income can still contribute £3,600 per year (including tax relief).
6. SIPPs are particularly useful for the self-employed
If you’re self-employed and don’t have a company pension, there’s even more reason to have a personal pension like a SIPP. You can contribute to it whenever you like, as and when your circumstances allow. This can be particularly useful if your earnings or expenses fluctuate.
If you’re a director of your own limited company, you can contribute to your SIPP directly from your pre-taxed company income. This can lower your company’s profits and, therefore, the corporation tax it must pay.
7. You can draw money from age 55
You can start withdrawing money from your SIPP – and most other personal pensions – once you turn 55. This will rise to age 57 from April 2028. Before you make a pension contribution, you should feel comfortable with the fact you’re locking away money for what could be several decades.
8. SIPP withdrawals have tax benefits too
When you come to withdraw your pension money, you can usually take up to 25% as tax-free cash, capped at £268,275. If you don’t want to take this money in one go, you can make smaller ongoing withdrawals until you’ve used your tax-free cash. Any further withdrawals will be taxed as income. The amount of income tax you pay will depend on the size of your withdrawals. For example, someone who is a higher-rate taxpayer before retirement might become a basic-rate taxpayer in retirement, potentially paying less income tax.
9. A SIPP differs from an ISA
SIPPs and ISAs are both tax-efficient savings vehicles, but there are some important differences. As mentioned above, money in a SIPP is locked away until at least age 55, whereas you can draw money from ISAs at any age. And whereas SIPP contributions earn tax relief, ISA contributions do not. On the flipside, you won’t be taxed when you draw money from your ISA.
Find out more about the differences between pensions and ISAs and which is better for long-term saving.
10. Managing a SIPP is simple
Investing and managing your SIPP is easier than you might think.
If you want a helping hand, we offer a Managed Personal Pension, where we select and manage investments for you based on your attitude to risk.
Alternatively, you can build your own portfolio from our wide range of low-cost funds. Or you can keep things simple with one of our Target Retirement Funds. These are ready-made portfolios that mature with you, so you don’t have to worry about adjusting your investments as you get closer to retirement.
1 Qualifying earnings are earnings between a lower and upper limit in a given tax year. For the 2024-25 and 2025-26 tax years, qualifying earnings are between £6,240 and £50,270.
2 Not all company pensions may be suitable for transferring into a SIPP. So-called defined benefit (DB) – or ‘final salary’ schemes – which are becoming rarer, are usually not. If in doubt, consult a financial adviser.
3 For more on what counts as ‘relevant earnings’ that can earn tax relief when used to fund a pension, see the HMRC Pensions Tax Manual.
4 To work out if you have a reduced (tapered) annual allowance, see HMRC’s website.
Investment risk information
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.
Eligibility to invest in a Vanguard Personal Pension depends on your individual circumstances. Please be aware that pension and tax rules may change in the future and the value of investments can go down as well as up, so you might get back less than you invested. You cannot usually access your pension savings or make any withdrawals until the age of 55, rising to the age of 57 in 2028.
If you are not sure of the suitability or appropriateness of any investment, product or service you should consult an authorised financial adviser. Please note this may incur a charge.
Your transfer will be sent to us as cash or shares (Vanguard funds only). During the transfer period any cash will not be invested so you could miss out on any increase in the value of your investments should the market rise.
Any tax reliefs referred to are those available under current legislation, which may change, and their availability and value will depend on your individual circumstances. If you have questions relating to your specific tax situation, please contact your tax adviser.
The Vanguard Target Retirement Funds may invest in Exchange Traded Fund (ETF) shares. ETF shares can be bought or sold only through a broker. Investing in ETFs entails stockbroker commission and a bid- offer spread which should be considered fully before investing.
For further information on risks please see the “Risk Factors” section of the prospectus on our website.
Important information
Vanguard only gives information on products and services and does not give investment advice based on individual circumstances. If you have any questions related to your investment decision or the suitability or appropriateness for you of the product[s] described, please contact your financial adviser.
For further information on the fund's investment policies and risks, please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions. The KIID for this fund is available, alongside the prospectus via Vanguard’s website.
This is designed for use by, and is directed only at persons resident in the UK.
The information contained herein is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of shares and /or units of, and the receipt of distribution from any investment.
Vanguard will manage your investments in the Managed SIPP on your behalf. You will not be able to place trades on your own account.
The Authorised Corporate Director for Vanguard LifeStrategy Funds ICVC is Vanguard Investments UK, Limited. Vanguard Asset Management, Limited is a distributor of Vanguard LifeStrategy Funds ICVC.
For investors in UK domiciled funds, see our summary of investor rights available in English.
Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.
© 2025 Vanguard Asset Management Limited. All rights reserved.
4282099