SIPPs Explained: A Simple Guide for 2026 and Beyond
Self‑Invested Personal Pensions (SIPPs) have become an increasingly popular way for people to take more control over how their retirement savings are invested. But with that flexibility comes a need to fully understand how SIPPs work, the tax advantages on offer, and the responsibilities involved in managing them. As an accountancy firm, we regularly help clients understand whether a SIPP is right for them, how to maximise tax efficiency, and how to avoid pitfalls that could impact their long‑term plans.
Below, we’ve broken down the essentials clearly and practically.
What is a SIPP?
A Self‑Invested Personal Pension (SIPP) is a type of defined contribution pension, meaning its value depends on how much you pay in and how well your investments perform over time. What makes a SIPP different from a traditional personal pension is the freedom you get to choose your own investments.
Depending on the provider, you can:
Select from a wide range of funds
Invest in shares, bonds, commercial property and more
Leave investment choices to the SIPP provider
Work with a financial adviser to build and manage a portfolio
For clients who want greater control or who feel comfortable making investment decisions, SIPPs can be an attractive option. For others, the wide choice can feel overwhelming - something we help clients navigate.
How a SIPP Works
Money you (and possibly your employer) pay into a SIPP is invested with the aim of growing your pension pot over time. The eventual amount you can draw in retirement depends on:
Your contributions
Investment performance
Fees charged by the SIPP provider
How and when you choose to draw your pension
At ATN Partnership, we focus particularly on ensuring contributions are tax‑efficient, aligned with your annual allowance, and integrated properly with your wider financial plans.
Tax Relief: One of the Biggest Benefits
One of the strongest advantages of SIPPs is the tax relief added by the government.
Basic tax relief (20%)
Most SIPP providers claim the basic 20% tax relief on your behalf.
So if you pay £80, the government adds £20, giving you a £100 contribution.
Higher and additional‑rate relief
If you pay Income Tax at 40% or 45%, you must claim the extra tax relief yourself, typically through:
Self Assessment
Contacting HMRC
A form submitted via GOV.UK
For higher‑rate taxpayers, a £100 SIPP contribution effectively costs £60 after all relief is claimed.
Annual allowance
You can normally receive tax relief on pension contributions up to the lower of:
£60,000 per tax year, or
Your total earnings
If you earn under £3,600, you can still benefit from relief on contributions up to £2,880, with the government adding £720.
When You Can Access Your SIPP
In most cases, you can start taking money from your SIPP from age 55, rising to 57 in April 2028.
When you do access your pension, you can usually take:
Up to 25% tax‑free, and
Use the rest in several ways depending on your needs
Your options include:
Leaving the pot invested
Taking lump sums as required
Receiving a flexible income (drawdown)
Buying an annuity for guaranteed income
For clients aged 50 and above, Pension Wise offers a free appointment to help explain these choices. We often help clients understand the tax impact of each option, ensuring withdrawals are planned sensibly.
Investment Risks to Consider
A wider investment choice also means more responsibility. Before opening a SIPP, it’s important to understand:
Investments can rise and fall
Higher returns often involve higher risk
Diversifying investments is essential
Fees can erode long‑term returns if unmanaged
If you prefer not to take responsibility for regular monitoring, a SIPP may still be suitable - but you might want professional investment advice.
Working with a Financial Adviser
Many clients choose to work with a regulated adviser to build and manage their SIPP investments. Advisers must clearly disclose fees upfront, and if you later suffer losses due to unsuitable advice, you may have a route to claim compensation.
As accountants, we don't give investment advice, but we regularly work alongside trusted advisers, ensuring the tax perspective is always factored into decisions.
How We Can Help
At ATN Partnership, we regularly support clients with:
Understanding the tax benefits of SIPPs
Calculating how much tax relief they can claim
Ensuring they don’t breach annual allowances
Including pension details correctly on Self Assessments
Identifying opportunities for higher‑rate relief that may otherwise go unclaimed
Working alongside advisers to manage pension contributions efficiently
Reviewing the tax impact of withdrawals and retirement income strategies
If you’re considering opening or contributing to a SIPP – or want a clearer picture of your retirement planning options – we will be happy to help you make informed, tax-efficient decisions.