SIPP Calculator
Self-Invested Personal Pension (UK) — Projected Pot & Tax Relief
2025-26 SIPP Allowances
What Is a SIPP?
A Self-Invested Personal Pension (SIPP) is a UK government-approved pension wrapper that gives you control over your investment choices. Unlike workplace pensions with limited fund selections, a SIPP allows you to invest in thousands of funds, ETFs, investment trusts, shares, and bonds. Contributions benefit from tax relief at your marginal income tax rate, making it one of the most tax-efficient savings vehicles available in the UK. SIPPs are regulated by the FCA and your assets are protected by the Financial Services Compensation Scheme (FSCS) up to £85,000 per provider.
How SIPP Tax Relief Works (2025-26)
Tax relief is the SIPP's most powerful feature. For every £80 you contribute, HMRC adds £20 (for basic rate taxpayers), meaning £100 goes into your pension at a cost of just £80 to you:
- Basic rate (20%): Your provider claims 20% relief at source. You contribute £800/month → £1,000/month goes in. The relief is automatic — no paperwork needed.
- Higher rate (40%): Your provider claims the basic 20%. You claim the additional 20% via Self Assessment — effectively reducing your cost to £600 per £1,000 invested.
- Additional rate (45%): As above, but claim 25% additional relief via Self Assessment — cost of £550 per £1,000 invested.
The Annual Allowance for 2025-26 is £60,000 (or 100% of your UK earnings, whichever is lower). The annual allowance covers all pension contributions including employer contributions across all pensions.
SIPP at Retirement: Your Options
- Tax-Free Cash (PCLS): From age 55 (57 from April 2028), take up to 25% of your pension as a tax-free lump sum — capped at £268,275 (2025-26). This cap replaces the old Lifetime Allowance limit abolished in April 2024.
- Flexi-Access Drawdown: Keep the pot invested and draw income as needed. Income is taxable as earned income. This triggers the Money Purchase Annual Allowance (MPAA) of £10,000 for future contributions.
- Annuity: Use all or part of your pot to buy a guaranteed income for life. Rates depend on your age, health, and prevailing interest rates. Less flexible than drawdown but removes longevity risk.
- Uncrystallised Funds Pension Lump Sum (UFPLS): Take lump sums directly — 25% of each payment is tax-free, 75% taxable.
SIPP vs Workplace Pension
A workplace pension (auto-enrolment) requires a minimum 3% employer + 5% employee contribution (8% total). The employer contribution is effectively free money — always maximise this first before contributing to a SIPP. SIPPs are ideal for: the self-employed (no workplace pension), additional contributions beyond your workplace pension, and anyone who wants broader investment choice or lower platform fees than their employer's default scheme offers.
⚠️ This calculator provides projections only and does not constitute financial advice. Pension values can go down as well as up. Tax rules may change. The tax-free cash cap (£268,275) and allowances are based on 2025-26 HMRC rules. Consult an FCA-regulated financial adviser for personalised pension advice.