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Daily Mail
29-05-2025
- Business
- Daily Mail
Can I avoid inheritance tax using loophole of owning a historic listed building?
My wife and I are both approaching 80 and we own our home as tenants-in-common. It is situated in a conservation area, and could well be listed as it is an original stone coach house dating back to 1860. I am reasonably au fait with the proposed changes being introduced in April 2027, which will bring pensions into the inheritance tax calculation. This will create a problem for me as I have saved most of my life into a Sipp, and consequently have pension monies that will take me well over the inheritance tax exemption limits. It has been mentioned to me that if our home is established as a listed building, then the value of our home will be excluded from the inheritance tax calculation. It is our intention to pass our home down to our children thereby establishing the extra £350,000 inheritance tax exemption. The value of our home is probably around £650,000, which is higher than the current inheritance tax home exemption. The problem is that I cannot seem to find out if the idea of a listed building being outside the scope of inheritance tax has any validity or is it simply a lot of hot air? Heather Rogers replies: How lovely to have such an interesting and unusual property to call your family home. I will explain the rules and I will then answer your specific question at the end. There are some special rules regarding not just inheritance tax exemptions but also capital gains tax exemptions for what are known as 'heritage assets'. The relief is given under the Conditional Exemption Tax Incentive Scheme. However, first of all we have to define what a heritage asset is and furthermore, the asset and its owners have to meet all the criteria to claim relief. There are many beautiful buildings in this country, but the term 'heritage asset' does not just apply to buildings, it can apply to any asset of significance. What defines a heritage asset? A heritage asset is one of the following: - Buildings, estates or parklands of outstanding historical or architectural interest; - Land of outstanding natural beauty/spectacular views; - Land of outstanding scientific interest including special areas for the conservation of wildlife, plants and trees; - Objects with national scientific, historic or artistic interest, either in their own right or due to a connection with a historical building. Are there any conditions the owner has to follow? Yes. The owner of the heritage asset must agree to: - Look after the item; - Make it available for the general public to view; usually without prior appointment for objects (eg works of art) at least for a certain number of days each year; - Keep it in the UK. The conditions above forming the agreement are normally known as the 'undertakings'. What tax exemptions are available? Under what is known as the Conditional Exemption Tax Incentive Scheme, the assets can be exempt from inheritance tax and capital gains tax when they pass to a new owner, either as the result of a death or as a gift. The idea is twofold: - To avoid noteworthy land/buildings being broken up into smaller lots due to the sale having to take place to pay inheritance tax on the death of the owner - To avoid noteworthy national assets being sold and leaving the country. What happens if a heritage asset is sold? If either the owner of the heritage asset does not keep to the undertakings or sells the asset, the conditional exemption is withdrawn and capital gains tax would be due on the sale. Additionally, if relief from inheritance tax was claimed when the asset transferred to the new owner, who has now decided to sell, that inheritance tax relief will be clawed back. Is a listed building a heritage asset qualifying for conditional exemption? Not necessarily. A listed building is one of special historic or architectural interest. Buildings can be listed in three ways: Grade I – these are deemed of exceptional interest; Grade II*- very important buildings; Grade II – special interest buildings. More about how this is determined can be found here: Principles of selection for Listed Buildings. You can find out if your building is already listed here. Who decides what is a heritage asset? HMRC will determine which assets qualify for conditional exemption on the advice of the government's various heritage advisory agencies. If you have a query about an asset, either yours or one on the list, you can contact the HMRC Heritage Team to get help and advice. Include HMRC's reference number if you have a current exemption. If you do not have a current exemption or designation, you need to email the team rather than send a letter. More details can be found here: Tax relief for national heritage assets A list of heritage assets can be found here (the link is not secure though so be careful if you use it). How much is inheritance tax? Tax of 40 per cent is typically levied on a deceased person's assets worth over and above £325,000, which is called the nil rate band, explains Heather Rogers. Many people are allowed to leave a further £175,000 worth of assets without them becoming liable for inheritance tax, if their home forms part of their estate and they leave it to direct descendants. That means children, including adopted, step or fostered, and those children's linear descendants. This extra sum is what is called the residence nil rate band, and it is available to claim on deaths on or after 6 April 2017. Both protected amounts or 'bands', adding up to £500,000 per person, can be transferred to a surviving spouse or civil partner if unused on the death of the first spouse. What about your property? In your case, you have an unusual building but you are not sure if your building is listed, or could qualify as a heritage asset. You can therefore take the following steps. 1. Find out if your building is already listed here. 2. If it is not yet listed, find out more about the criteria here. 3. Apply for listing of your building here. 4. You can contact Historic England for help and advice. Customer Services via email at customers@ or by phone at 0370 333 0607. 5. You can email the Listing Helpdesk at for specific advice relating to listing applications. They will then be able to advise if you have a case for the conditional exemption. 6. If you believe you have a case, contact the HMRC Heritage Team about a conditional exemption: mailpoint.f@ If your home qualifies as a heritage asset, then you can pass it on free of inheritance tax but the new owner must follow the rules above, as must you. If it doesn't qualify, then it will be included in your estate in the normal manner. Ask Heather Rogers a tax question Heather Rogers, founder and owner of Aston Accountancy, is our tax columnist. She is ready to answer your questions on any tax topic - tax codes, inheritance tax, income tax, capital gains tax, and much more. If you would like to ask Heather a question about tax, email her at taxquestions@ Heather will do her best to reply to your message in a forthcoming monthly column, but she won't be able to answer everyone or correspond privately with readers. Nothing in her replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons. Please include a daytime contact number with your message - this will be kept confidential and not used for marketing purposes. If Heather is unable to answer your question, you can find out about getting help with tax here, including sources of free professional advice if you are elderly and/or on a low income. You can also contact MoneyHelper, a Government-backed organisation which gives free assistance on financial matters to the public. Its number is 0800 011 3797.
Daily Mail
26-05-2025
- Business
- Daily Mail
Should I switch my work pension to a Sipp run by a financial adviser? STEVE WEBB replies
I currently have a company pension scheme which is operated by a large pension firm, with my funds all in a tracker. A financial firm I work with has suggested it would be advantageous for me to move my pension funds into a Sipp with them. Apart from the fact it's actively managed and has greater diversification of holdings, I wanted to see if you were able to provide any impartial advice or perspective on the differences between the two options, and the pros and cons? Steve Webb replies: There are two separate questions for you to consider here. The first is whether you are better off saving via a workplace pension, or with a self-invested personal pension (Sipp) on a platform run by an advice firm. The second is whether, in general, you are likely to do better with investments which 'passively' follow market movements, or ones which are 'actively' managed, reflecting the judgments of fund managers. Workplace pension schemes versus Sipps In terms of the choice between a workplace pension and a Sipp, it is highly unlikely that you would do better to opt out of your workplace pension entirely. Your employer is required by law to pay in to your workplace pension and it is likely to be a good idea to make the most of any employer contribution. A second advantage of a workplace pension is that it is likely to be relatively low cost. Whilst cost is not the only consideration, you are likely to pay significantly lower charges overall with a workplace pension, particularly if you work for a big firm. There is a charge cap of 0.75 per cent on the main funds used in workplace pensions, and the average cost actually paid is typically closer to around 0.4 per cent. It is however possible that you are paying more than this if you have chosen to move your investments out of the 'default' fund choice. When it comes to a Sipp, hosted by a financial advice firm, there are multiple layers of charges to think about. First there are the charges on each underlying fund in your new portfolio. If these are 'actively manged' then you are likely to be paying more than in your workplace pension. In addition, your employer will have negotiated a competitive charge on behalf of all their employees for the workplace pension, whereas as an individual 'retail' investor you don't necessarily have the same buying power. Second, there may be a charge simply for having assets on the platform as well as potential charges for transactions. Third, you may also be paying advice charges. Financial advice can, of course, be good value, but you need to make sure you are clear what you would be paying and what service you would be getting for your money each year. It is also worth checking if the adviser is 'independent', meaning the firm will look at the whole market when recommending financial products to clients, or 'restricted', meaning they would only recommend those from certain providers. You will also want to consider the adviser's contractual terms, including how long you might be committed to staying with it and paying its annual ongoing charges, and any exit charges or rules in case you wish to move your fund elsewhere in future. Active versus passive funds You have sent me details of your proposed investment portfolio, and I see it includes some low-cost tracker funds with charges as low as 0.12 per cent as well as some actively managed funds charging up to eight times as much. The overall average charge comes out at 0.73 per cent, which is significantly more than most people are paying for a workplace pension. A workplace pension is managed on your behalf and all of the costs of doing this are included in the simple annual management charge, whereas with a Sipp run by an adviser you are paying extra for this service. On the other hand, the workplace pension is trying to cater for the needs of potentially millions of members whereas your adviser can tailor your investments for your particular needs and preferences. You may think it worth paying more for this. Turning to the debate about active versus passive investing, the obvious attraction of a passive fund such as an index 'tracker' is that it is likely to be very cheap. Managers of a tracker do not need to have particular insights about different asset classes or different markets, they simply have to make sure that the fund performance broadly matches the index which is being tracked. In addition, transaction activity is likely to be much lower in a passive tracker fund than in an actively managed fund, again reducing the overall cost. If you simply want to invest in the main UK stock market, or the US or global stock markets, then an 'active' manager is unlikely to add much value net of additional costs. Information about the biggest companies is readily available and so the potential for an expert fund manager to outperform the market on a consistent basis is limited. But there is research evidence that suggests that active managers have the potential to add more value in more specialist markets. One downside of simply investing passively in 'tracker' funds is that when you look at the companies which make up the index you may find them heavily concentrated in particular sectors. For example, the US stock market is heavily dominated by the so-called 'Magnificent Seven' technology stocks. As it happens, these stocks have done very well in recent years, but it is not inevitable that this will always be the case. By relying heavily on index trackers, your investments are unlikely to be well diversified and are likely to suffer greater volatility than a more broadly-based portfolio. One way to overcome this is to include trackers as part of a wider and more diverse set of investments, and I see that this is the approach taken in your proposed portfolio. Alongside low cost trackers, your investments would be globally diversified and includes investments in 'emerging markets', as well as specific funds for China and Japan. If your fund managers have specialist expertise in these areas then it's possible that they can add value and justify the extra cost. You should be able to look at fact sheets for different funds which will tell you how they have performed compared with relevant benchmarks. But you should be aware that just because a fund has outperformed an index in the past it doesn't automatically follow that it will always do so. Ultimately, this is a very individual decision. You clearly should think very carefully about opting out of your current workplace pension with its associated employer contribution and low cost investments. But if you think that your goals would be better met by something more tailored, albeit more expensive, then you could consider putting additional contributions into a Sipp and also potentially consolidate other pensions from other jobs into the Sipp. Your adviser will be able to recommend whether this is the right strategy for you. Ask Steve Webb a pension question Former pensions minister Steve Webb is This Is Money's agony uncle. He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement. Steve left the Department for Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock. If you would like to ask Steve a question about pensions, please email him at pensionquestions@ Steve will do his best to reply to your message in a forthcoming column, but he won't be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons. Please include a daytime contact number with your message - this will be kept confidential and not used for marketing purposes. If Steve is unable to answer your question, you can also contact MoneyHelper, a Government-backed organisation which gives free assistance on pensions to the public. It can be found here and its number is 0800 011 3797.
Daily Mail
20-05-2025
- Business
- Daily Mail
IG offers a huge 8.5% rate on cash savings - is it worth taking?
IG has blasted its way into the investing platforms skirmishing to offer savers the most attractive headline interest rates, introducing a boosted 8.5 per cent rate on uninvested cash. IG's new rate* gives savers the opportunity to earn double the base rate on up to £100,000 until the end of August, after which the rate drops to match the Bank of England's benchmark. While the boost only lasts three months, the bumper rate may mean some consider it is worth taking. But cash savers should note that IG is an investment platform and to access the boosted rate, you must both place a trade before 31 May and hold an investment at the end of each of the three months. IG's custody fee could also catch out those who don't intend to actively invest. If you trade at least three times in a quarter then there is no account fee, otherwise IG charges £8 per month. Earlier this month, the Bank of England voted to cut its benchmark interest rate by 0.25 percentage points to 4.25 per cent. While interest on savings isn't necessarily tied to this base rate, providers take changes into account when deciding on rates to offer savers. Some have already cut rates in reaction to the drop. All this follows a heated battle at the beginning of April among a troupe of providers that kept inching up their three-month boosts as the end of the tax year approached. Two providers from that clash are still duking it out: CMC Invest* and Moneybox. Three-month fixed boosts from these providers mean savers opening one of these accounts today should comfortably beat the base rate until August. High earning potential for savers prepared to invest While providers have generally been boosting rates on Isas, IG's 8.5 per cent rate * applies to uninvested cash held in any of its accounts – whether it's an Isa, Sipp or General Investment Account. The catch is that as an investment platform, IG is offering the rate to encourage cash savers to start trading. This means it's more suited to those who have some experience with investing already. New customers (and existing customers who haven't yet placed a trade) must open an account and make an investment before 31 May to be eligible for the offer. You'll receive a boosted rate each month that you hold the investment, until 31 August. You'll also be eligible for the rate for each month you buy or sell an investment or hold one of IG's Smart Portfolios, which are its ready-made investment option. IG says if you opened an account on 9 May, had £20,000 in cash and met all the conditions each month, you'd earn £520 in interest. If you want to invest, IG is just one of many available investment platforms, and because it charges a fee for holding assets if you don't trade, it's potentially a more costly choice than others. This fee could catch out savers going for the boost who don't intend to trade actively. If you make less than three trades each quarter you'll be charged £24, but there's no fee if you make more than three trades. It's important you check the terms and conditions of the deal and read more about the fees that IG charges. Finally you should make sure you open an investment account and not a trading account, which includes spread betting and CFD trading. IG says that 71 per cent of investors lose money when trading in this way on the platform. > Find out more about IG's deal* What alternatives are there for cash savers? Savers can beat the base rate with both CMC Invest* and Moneybox, who are offering more straightforward boosts on cash Isas. Although the earning potential isn't as high, there's no obligation for cash savers to invest. In our view CMC Invest's 5.7 per cent account, including a 0.85 per cent three-month boost, beats Moneybox's because it offers more flexibility around accessing your money. Keep in mind Moneybox has announced that its headline boosted cash Isa rate is going down to 5.46 per cent on 29 May, including a 1.51 per cent three-month bonus. CMC Invest hasn't announced a cut, yet. When looking at cash Isas with short bonuses it is important to consider what the average rate over a whole year will be. CMC Invest's account averages 5.06 per cent over a year (but is yet to be cut) while Moneybox's will average 4.33 per cent after its looming cut. In contrast, Trading 212* has already lowered its rate in response to the Bank of England cut and is paying 4.86 per cent, including a 12 month 0.76 per cent bonus. For more alternatives you can also read our regularly updated round-up of our favourite cash Isas.
Chicago Tribune
09-05-2025
- Automotive
- Chicago Tribune
Gary bike documentary to premiere Saturday
Ten years ago, a Gary program was created to bring bikes to the city. Now, a Gary woman's film company is premiering 'Take Bike the Streets,' a documentary focused on bicycle advocacy across Northwest Indiana. '(We learned) about 19% of the Gary population depending solely on public transit, and there was no bike shop at all within the city,' said Jessica Renslow, a Gary resident and creator of 'Take Bike the Streets.' From 4 to 6 p.m. Saturday, 'Take Bike the Streets' will premiere at the Marshall J. Gardner Center for the Arts in Gary's Miller neighborhood. Tickets can be bought online or at the door and are $5 or 'whatever you can donate,' according to a news release. All proceeds will go to the Ken Parr Build a Bike program. Parr, who died in 2016, was one of the original volunteers, a local science teacher and cycling advocate. The program helps build and repair bikes from June to August, according to the 'Take Bike the Streets' website. Since 2021, the program has hosted virtual courses and met for bimonthly workshops, which are free and available to people of all ages. 'Ken was our bike guy,' Renslow said. 'I was like, 'Oh my gosh. We have to keep this going in his honor.'' 'Take Bike the Streets' originally premiered in Italy, but Gary's Saturday showing is the documentary's U.S. premiere, Renslow said. 'I was saving the U.S. premiere for this, so that we could do it as a little fundraiser for Build a Bike because all proceeds go to help run the program and get kids and adults to learn about bikes,' Renslow said. 'This is a good way to bridge all things bike.' Gretchen Sipp is a longtime Gary resident and volunteer with Build a Bike. She is one of the people interviewed for the film and said she helped participate in the inception of the idea, by surveying community members and taking part in brainstorming sessions. Sipp wanted to volunteer with the program because she thinks it's important to educate people of all ages about bike safety. She's happy to say she was part of the documentary. ''Take Bike the Streets' was something that everyone could do — regardless of skill, ability, mobility — everyone could have a part, whether you're taking a bike ride, fixing one or volunteering to help on the administrative side,' Sipp said. ''Take Bike the Streets' was one of those all-inclusive things that everybody knew that we needed. We needed some active transportation in our vast community.' The film premiere is bittersweet, Sipp said, especially because Parr can't witness it and the work that's highlighted. After 10 years, Build a Bike has become a longstanding Gary initiative, Sipp said, and she thinks Parr would be proud to see what it turned into. 'He was a quiet, reserved man, but he was a staple in our community,' Sipp said. 'He did his part, and no one had to ask him. … He took the initiative to take pride in where he lived, and it affected many people.' Second-year students at the Hammond Area Career Center helped edit 'Take Bike the Streets,' Renslow said. Renslow has known the career center teacher who oversees the radio and television production program since high school. Stephanie Reiser said six students were originally involved in the editing, but three finished the film. 'Part of my curriculum in the second-year program is strictly client work,' Reiser said. 'I'm always looking for clients for my students to get real world experience with. So working with (Renslow) was a great opportunity to do client work and have them work independently.' Reiser hasn't seen the finished product of 'Take Bike the Streets,' but it makes her proud to know that her students played a part in its production. 'My students did something amazing, and it's nice to know I had a hand in that,' Reiser said. 'As a teacher, it's pretty amazing for me to watch my students become involved in stuff like this.'
Daily Mail
01-05-2025
- Business
- Daily Mail
Our pick of the best Sipps: How to choose the right investment platform for your pension
The best Sipp provider will be one that's offering the cheapest fees for your needs, a good level of investment choice and an easy-to-use service. Sipps, or self-invested personal pensions, give you more control over how your pension pot is invested than other types of pension. Since their launch they have become a hugely popular way for Britain's investors to build up a pension pot outside of their workplace scheme. In a Sipp, you can invest in a range of shares and funds and most platforms also offer managed options, often called ready-made portfolios or ready-made investments. See our pick of the best Sipps for different circumstances below, in alphabetical order. We also explain more about Sipps, including how a Sipp works and the options for withdrawing money from your pension when the time comes. A selection of the best Sipp providers For a highly rated service AJ Bell* Learn More AJ Bell's Sipp pros and cons AJ Bell's account fees are competitive. The foreign exchange fees are lower than some other providers. Fund dealing costs £1.50, while other platforms offer this at no cost. There are fees for regular investments and dividend reinvestment. AJ Bell offers a full range of UK and overseas shares, funds, investment trusts, ETFs and bonds. It charges a 0.25 per cent account fee, which is lower than big rival Hargreaves Lansdown, but there are charges for all types of trading. It costs £1.50 for fund dealing and £5 for share dealing. AJ Bell is highly rated on Trustpilot. Charles Stanley Direct* Charles Stanley Direct's Sipp pros and cons Charles Stanley Direct's account fee is straightforward. There's no platform fee when you invest in Charles Stanley multi-asset Funds. There are fees for both fund and share dealing. There's a £100 admin charge for pots of less than £30,000. Charles Stanley Direct has wide range of funds, investment trusts, ETFs, and UK and international shares, with platform fees that are competitive and some money back in free trades. You'll pay 0.3 per cent on the value of your investments, up to a maximum of £600. If you have a smaller pot, the minimum you'll pay is £60. There is a £100 plus VAT Sipp fee but this is waived if you have more than £30,000 across Charles Stanley accounts. If you have less than £30,000 you may want to look elsewhere. Fund dealing costs £4 and share dealing costs £10, but customers get £100 in trading credits each year. Pros and cons of Hargreaves Lansdown's Sipp Hargreaves Lansdown's customer service team is available six days a week. There's a wide range of investments available through the platform. The account fees are higher than most other platforms. Share dealing is expensive at £11.95 a share. Hargreaves Lansdown is the biggest and most well-known of the investment platforms and has a broad range of shares, funds, investment trusts, ETFs and bonds. It prides itself on customer service but charges a high 0.45 per cent account fee. This steps down to 0.2 per cent above £250,000 and 0.1 per cent above £1million. There is a £200 annual cap for stock market listed holdings and bonds in a Sipp. While there are no charges for fund dealing, regular investments or dividend reinvestment, HL's share dealing fees are high at £11.95. But Hargreaves Lansdown is a good option if you're conscious about customer support. Its team is available six days of the week, and you can access a range of investment tools and research to help you build your portfolio. Pros and cons of Interactive Investor's Sipp Interactive Investor's flat fee structure means it can work out the cheapest of the traditional investment platforms. Share dealing is cheaper than most other platforms. Fund dealing costs £3.99, while other platforms offer this at no cost. The foreign exchange fees are higher than some other platforms charge, plus Interactive Investor charges £9.99 for international share dealing. Unlike most Sipp providers, Interactive Investor charges a monthly subscription fee rather than a fee as a percentage of your investments. It offers a full range of investments. Charges depend on whether you also hold a general account of stocks & shares Isa with II. If you just have a Sipp, monthly charges start at £5.99 until your pot reaches £50,000. Above this monthly charges are £12.99. Investors with another II account can have up to £50,000 in an Isa or general account and pay £5 extra for a Sipp until their total holdings breach £75,000, at which point they step up to paying £21.99 for all their accounts. The flat fee is attractive for people with larger pots, because you're charged the same whether you have £80,000, £500,000 or £1million in your Sipp. But if you're an active investor, keep an eye on the fees for buying and selling investments. For refunded fees on select index funds Prosper* Pros and cons of Prosper's Sipp Prosper has no account fees or fees for buying and selling investments. Prosper refunds ongoing fees and transaction charges from select index funds. Potentially free Sipp investing Prosper is app-only and you cannot invest in shares If you're willing to choose a less well-known name for your Sipp and are happy to go app-only, it's worth considering Prosper. It offers funds, investment trusts and ETFs and can be a very cheap way to invest your pension. It's possible to build a very low-cost portfolio, because there are no account fees or fees for buying and selling investments, plus Prosper refunds the ongoing fees and transaction charges on 30 index funds from the likes of Blackrock and Vanguard. Here are other Sipp providers to consider: Bestinvest is generally cheaper than Hargreaves Lansdown, but the more cost-conscious could still find its platform fees expensive. Freetrade * is another Sipp provider that offers subscription-based investing, with a flat fee of £9.99 a month (£119.88 billed annually). Vanguard is a low-cost option that makes sense if you only want to invest in Vanguard's own funds or ready-made portfolios. Vanguard's funds track different worldwide markets. How much does each Sipp provider cost? Provider Sipp account charge Notes Fund dealing Standard share, trust, ETF dealing Regular investing Dividend reinvestment AJ Bell * 0.25% Max £10 a month account charge for shares £1.50 £5 £1.50 £1.50 Bestinvest 0.40% 0.2% for ready-made portfolios No charge £4.95 (US shares free) No charge No charge Charles Stanley Direct * 0.30% Min platform fee £60, max £600. £100 back in free trades per year £4 £10 Free for funds N/a Fidelity * 0.35% £7.50 monthly fee without regular savings plan for less than £25,000 No charge £7.50 Free funds, £1.50 shares, trusts ETFs £1.50 Freetrade * £9.99 a month when paying annually £11.99 when paying monthly Not available No charge N/a N/a Hargreaves Lansdown * 0.45% Max £200 a year account charge for shares No charge £11.95 No charge No charge Interactive Investor * £5.99 a month (below £50k), £12.99 a month (above £50k) Extra Sipp charges if also hold an Isa or standard account make it £21.99 a month above a total £75k £3.99 £3.99 UK and US shares, £9.99 international No charge £0.99 InvestEngine * Free Only ETF investing. Managed service is 0.25% Not available No charge No charge N/a Prosper * Free Refunded ongoing fees from 30 index funds No charge No charge (shares not available) No charge N/a Vanguard £4 a month (below £32k), 0.15% (above £32k) Only Vanguard funds No charge No charge No charge N/a What to look for when choosing a Sipp provider When comparing Sipp providers, think about the level of service you need. Providers generally compete on fees, which is the main element to look out for. High fees eat away at the value of your portfolio, so you'll want to keep costs down as much as possible. But the cheapest Sipp won't always be the best – it depends on how you intend to use the investment platform. Some offer low fees but a limited choice of investments. Others may look expensive but won't charge for regular trading of funds, so could work out best for more active investors. And certain platforms come with a wealth of investment support, including research and even investment coaches that you can speak to. So with different charging structures, tools, available research and levels of customer support, answering some key questions like the below will help when comparing providers: 1. What type of investor are you? The big question. If you're the type of investor that trades regularly, look at a service that doesn't charge you too much for doing so and gives you the right level of customer support, investment research and choice of investments. But if you're aiming to invest in low-cost passive funds and forget about them, you won't want to pay through the roof for extra bells and whistles you don't need. 2. What's the value of your pension pot? If you're transferring existing pensions to a Sipp, work out how much your annual account charges will be with different providers. For example, a subscription model could work out better for larger pots. A note on transferring – some providers charge exit fees to transfer a pension, so make sure you check whether these apply. 3. How will you access your money at retirement? It's important to choose a provider that offers flexibility when you reach retirement and it comes to drawing from your pension. At this stage, it can help to have guidance on your options available. Most Sipp providers no longer charge extra when it comes to taking an income from your pension, but it's always worth double checking. What is a Sipp? A Sipp is a type of pension that gives you the freedom to pick your own investments from a wide range available on the provider's investment platform. This is unlike other pensions that provide limited choice over how your money is invested. When you open a Sipp, you can use your online account to buy and sell investments and monitor how your portfolio is doing. A Sipp is a good option if you have a number of old pensions from different workplaces. It's possible to transfer your pensions to one provider, making it easier to keep track of how your investments are doing. Check you don't lose valuable guarantees by doing that though, first. A Sipp is also a good option if you're self-employed, because you have no auto-enrolment or employer to set up your pension for you. Your choice of investments will often include: shares – both UK and international bonds gilts investment trusts exchange traded funds (ETFs) You can usually open a stocks and shares Isa and a general investment account with your Sipp provider, which simplifies keeping track of your investments even further. Or you can invest in an Isa in one place and a Sipp in another - and you can have as many Sipps as you like. How does a Sipp work? You can open and pay into a Sipp in a similar way to other accounts, such as Isas and general investment accounts. And to encourage you to save for retirement, you get tax relief from the Government when you pay into your Sipp. Sipps are like employer defined contribution pensions. Your retirement pot depends on the total you contribute to the Sipp, investment performance, the fees your provider charges, and how and when you want to draw on your pension. This is opposed to employer defined benefit pensions. With these your retirement pot is based on how many years you were part of the scheme and your final salary with the employer. These schemes are now rare, so taking control of your retirement pot is more important than ever. How Sipp tax relief works Most people get tax relief on pension contributions. Sipp providers claim this for you through a process called relief at source, but only at the 20 per cent basic rate of income tax. If you're a higher rate taxpayer and pay income tax at 40 per cent, you may be able to claim further tax relief through self assessment. Here's an example of a higher rate taxpayer earning £90,000 a year who contributes £20,000 into their Sipp in the current tax year: The Sipp provider claims £4,000 tax relief automatically (25% uplift to replace 20% basic rate tax charged). The taxpayer can claim extra tax relief – another £4,000 – through self assessment. The taxpayer's pension contribution only cost them £12,000. Higher rate taxpayers can only claim further tax relief on earnings they paid 40 per cent tax on. In the above example, the taxpayer paid the higher rate on £39,730 of their earnings, so they can potentially claim up to £7,946 of extra relief. How much can you pay in to a Sipp? There's no limit to how much you can pay in to a Sipp, but there are limits to how much you can contribute and still receive tax relief. If you go over these limits, you'll get a tax charge. The annual allowance limits total contributions that can receive tax relief to £60,000 or 100 per cent of your earnings – whichever's lower. The annual allowance for higher earners is reduced by £1 for every £2 that someone earns above £260,000, until the allowance reaches £10,000. How investing in your Sipp works Sipp providers let you set up regular investments into your pension, or you can pay in a lump sum and pick your investments with it. Regular investments go straight into an investment of your choice every month. Some providers charge a small amount for regular investments, while others do it at no cost to you. Investing every month helps you build a savings habit, and instead of trying to time the market, you can smooth out the highs and lows through pound cost averaging. Otherwise, you can add cash to your account and then choose where to invest through the online platform. The freedom over where to invest your money is one of the great benefits of a Sipp. You search for investments through your online account and then choose how much you want to invest in each one. Most platforms offer a wealth of tools, guides and research to help you choose investments. Your exact mix of investments will depend on your overall retirement goals, your time horizon and your attitude to risk. How accessing your Sipp works You can't access the money in your Sipp until you reach the minimum pension age, which is currently 55. This is increasing to 57 from April 2028, affecting those born on or after 6 April 1973. You have different options for accessing your money when you reach retirement. Tax-free lump sum: you can take 25 per cent of your pension tax free, up to a maximum of £268,275 – your lump sum allowance. You can access the rest as taxable income. Other lump sums: uncrystallised funds pension lump sums (UFPLS) are where 25 per cent of a lump sum is tax-free, with the remainder subject to income tax. Drawdown: providers give you the option of moving money into drawdown, where you can withdraw up to 25 per cent tax free and then receive regular payments or take lump sums, which are taxed as earnings. You can move some or part of your pension into drawdown. Annuity: you can buy an annuity with your pension savings, which is a product that gives you a regular guaranteed retirement income. Sipp providers don't offer annuities directly. Keep in mind that as soon as you take taxable money from your defined contribution pension in a flexible arrangement, you can only get tax relief on £10,000 of your pension contributions each year. Accessing your pension is a huge financial decision, because your money needs to last long enough for you to live comfortably in retirement, and there's risk involved when withdrawing from investments. It's important to seek financial advice. What is the lump sum allowance (LSA)? The LSA replaced the previous lifetime allowance, which was abolished in April 2024 and limited the amount you could save in your pensions without being hit by a tax charge. The new LSA applies to all your pots, so if the value of your pension savings exceeds £1,073,100, the maximum you can take tax free is £268,275. How much pension income will you get? In defined contribution pension schemes like Sipps, the amount of money you'll receive in retirement depends on how much you contribute and the performance of your pension investments. It also depends on how you choose to withdraw money from your pension. You can factor the state pension into your forecast, but the age at which you're eligible for the state pension is much older than the minimum pension age. If you want to stop working earlier, you need to create and stick to a financial plan that gives you a sufficient pot to last your whole retirement.
