SIPP

What is a SIPP?

A SIPP (“Self-Invested Personal Pension”) is a type of UK private pension that gives you more control over how your private money is invested. Instead of an employer or private pension company choosing investments for you, you can usually choose investments yourself.

You can choose to invest your pension money in things like:

• Stocks
• Index funds
• ETFs
• Bonds
• Cash
• Sometimes commercial property

Benefits of SIPPs for company directors

If you’re a LTD company director, your company can pay money into your SIPP and get corporation tax relief on the amount invested. You also won’t have to pay any personal income tax on the amount.

For example, if your company pays £10k into your SIPP, the company’s profits for corporation tax purposes will be deducted by 10k.

When can you access the money in the SIPP?

At the time of writing, you have to be at least 58.

Benefits

• Tax-deductible for corporation tax purposes.

Downsides

• Because the money is locked away until pension age, there is an opportunity cost. You could have invested that money elsewhere: in stocks, real estate, or building a business. There’s also a possibility that the law will change so that the money will be locked away until an even older age than 58.