What is the annual SIPP allowance?
For most people, their annual allowance is up to £60,000 per tax year. This isn’t just a SIPP allowance – it applies to all payments into all your pensions. That includes the money you pay in yourself, as well as basic-rate tax relief and anything your employer pays in too.
If you pay in more than your annual allowance, you might have to pay a tax charge unless you have unused allowance from past tax years.
SIPP allowance exceptions
Your annual allowance will be tapered down if you have a high income (usually over £200,000 each year). Learn more about this in our guide to annual allowance tapering.
Your allowance will also be reduced to £10,000 if you’ve already accessed and taken an income from your SIPP or another defined contribution pension. This is called the money purchase annual allowance (MPAA). Read more about the MPAA.
How many SIPPs can I have?
As many as you like – there’s no restriction on the number of Self-invested personal pensions (SIPPs) or pensions you can open.
SIPP allowances apply to the amount paid into your pensions, as well as the total value of tax-free cash you can take when you come to access them.
How much can I pay into a SIPP?
The pension annual allowance applies to all contributions across your pensions in a year, including those from your employer. But your maximum personal contribution is also limited by the tax relief rules.
If you’re a UK resident and under 75, the government gives you tax relief when you pay into your SIPP. The maximum you can pay in and earn tax relief on is 100% of your UK earnings.
Everyone will get tax relief of 20% on what they pay in personally – so if you paid £800, the government automatically adds £200, giving you a total of £1,000 in your SIPP. If you pay tax on your earnings at a higher rate than 20%, then you can claim further tax relief directly from HMRC.
Tax-free cash allowance
The amount of tax-free cash you can take is usually 25% of the amount you want to access from your pension.
But there’s a maximum tax-free cash limit of £268,275 that applies across all your pensions in your lifetime.
In the past, you could apply for various protections to give you a higher lifetime allowance. If you applied before the deadline and kept to the conditions, you might have a higher tax-free cash allowance. You can find out whether you already have lifetime allowance protection on the government website.