Which is the cheapest SIPP provider?

Table of Contents

This is our guide to the cheapest SIPP.

Our team of finance experts cover which is the cheapest SIPP provider for a range of different scenarios and investments.

We also cover what a SIPP actually is, how they work, the types of fees and charges you can expect and the investments you can hold within them.

We’ll also show you how to open a SIPP and all of the pension rules you need to know.

Use the table of contents to skip ahead to the most relevant section for you or read on as we explain the cheapest SIPP providers for different needs. Let’s get into it.

Table of Contents

Cheapest SIPP Provider

Our overall cheapest SIPP provider depends on what you invest in, as most providers charge different fees based on the type of investment.

But, for mixed portfolios where you pick your own mutual funds, shares, bonds and ETFs, the two cheapest SIPP providers are AJ Bell and Interactive Investor (sometimes abbreviated to ‘ii’).

Generally, AJ Bell is cheaper for mixed portfolios under around £62,000 in value. Above £62,000 Interactive Investor becomes cheaper. We outline each of them below before showing some example portfolios where we’ve calculated the fees.

AJ Bell

AJ Bell is the cheapest SIPP for mixed portfolios worth under £62,000.

On top of that, AJ Bell provides thousands of shares, mutual funds, Exchange Traded Funds (ETFs), investments trusts and bonds to choose from. Plus, 4 ‘Starter portfolios’ if you don’t want to pick your own investments.

AJ Bell is also known for its excellent customer service and it has the highest Trustpilot rating of the SIPP providers in this guide at 4.8.

Capital at risk if you invest. AJ Bell is regulated by the FCA and has FSCS protection.

We also rate AJ Bell as our favourite all-round SIPP provider. Read all the details in our guide to the best SIPP provider.

Interactive Investor

Interactive Investor is the cheapest SIPP platform for mixed portfolios worth more than £62,000.

This is because it charges fixed monthly fees, which become a smaller percentage of your portfolio as your portfolio grows in value. So, if you want to invest in a combination of shares, mutual funds and bonds then Interactive Investor usually works out cheapest.

Interactive Investor has more than 40,000 shares, bonds and funds to invest in. There’s also a range of investment ideas and funds lists to help you decide what to invest in. Plus, dealing fees are lower than the other major SIPP providers and regular monthly investing is free.

Interactive Investor is regulated by the FCA and has FSCS protection.

To demonstrate these two low cost SIPP providers we look at a range of mixed portfolios below to see how their costs stack up. Generally, the larger the portfolio and the more weighted towards mutual funds it is, the cheaper it will be with Interactive Investor.


£10k Mixed Portfolio

Value
Fees
AJ BelliiHLBestinvest
Mutual Funds£4,000£10N/A£18£16
ETFs£4,000£10N/A£18£16
Shares£2,000£5N/A£9£8
Total£10,000£25£72£45£40
£25k Mixed PortfolioValueFees
AJ BelliiHLBestinvest
Mutual Funds£10,000£25N/A£45£40
ETFs£10,000£25N/A£45£40
Shares£5,000£13N/A£23£20
Total£25,000£63£72£113£100
£50k Mixed PortfolioValueFees
AJ BelliiHLBestinvest
Mutual Funds£20,000£50N/A£90£80
ETFs£20,000£50N/A£90£80
Shares£10,000£25N/A£45£40
Total£50,000£125£72£225£200
£60k Mixed PortfolioValueFees
AJ BelliiHLBestinvest
Mutual Funds£30,000£75N/A£135£120
ETFs£15,000£38N/A£68£60
Shares£15,000£38N/A£68£60
Total£60,000£150£156£270£240
£75k Mixed PortfolioValueFees
AJ BelliiHLBestinvest
Mutual Funds£30,000£75N/A£135£120
ETFs£30,000£75N/A£135£120
Shares£15,000£38N/A£68£60
Total£75,000£188£156£335£300
£100k Mixed PortfolioValueFees
AJ BelliiHLBestinvest
Mutual Funds£40,000£100N/A£180£160
ETFs£40,000£100N/A£180£160
Shares£20,000£50N/A£90£80
Total£100,000£220£156£380£400
£250k Mixed PortfolioValueFees
AJ BelliiHLBestinvest
Mutual Funds£100,000£250N/A£450£400
ETFs£100,000£250N/A£450£400
Shares£50,000£125N/A£225£200
Total£250,000£370£156£650£1,000
£500k Mixed PortfolioValueFees
AJ BelliiHLBestinvest
Mutual Funds£200,000£500N/A£900£800
ETFs£200,000£500N/A£900£800
Shares£100,000£250N/A£450£400
Total£500,000£620£156£1,100£2,000

£1m Mixed Portfolio

Value
Fees
AJ BelliiHLBestinvest
Mutual Funds£400,000£775N/A£1,500£1,300
ETFs£400,000£1,000N/A£1,800£1,300
Shares£200,000£500N/A£900£800
Total£1,000,000£895£156£1,700£3,400

Note that the totals for AJ Bell and Hargreaves Lansdown are adjusted for their respective annual fee caps on shares, ETFs, bonds and investments trusts of £120 and £200.

That covers the cheapest SIPPs for building your own portfolio. Next we look at the cheapest SIPP providers for passive investing.

Cheapest SIPP provider for passive investing

If you don’t want to choose your own investments and manage your SIPP yourself, you can pick from a number of robo-advisors and ready-made portfolios. The two best value SIPP providers, in our view, are Moneyfarm and Hargreaves Lansdown’s Ready-Made SIPP.

Moneyfarm is the best low cost SIPP robo-advisor. Hargreaves Lansdown recently introduced its Ready-Made SIPP which also offers excellent value:

Moneyfarm

If you want professionals to take care of your SIPP investments for you, then Moneyfarm is our top pick for passive investing.

Moneyfarm has one of the best performance track records of the main robo-advisors combined with low charges which reduce as your pension pot grows.

Free guidance from investment consultants, great customer service and socially responsible options also make it a great choice for your SIPP.

Capital at risk if you invest. FCA regulated and FSCS protected.

Hargreaves Lansdown

The UK’s largest retail investment platform, Hargreaves Lansdown, is also a great option for your SIPP. It has a massive range of investment options, a superb app and recently launched the HL Ready-Made Pension Plan.

HL’s Ready-Made Pension Plan operates in a similar way to ‘standard’ personal pension providers where experts not only invest your money for you but rebalance it as you get closer to retirement. This is something you’d typically have to do yourself with a SIPP. 

So for a fully managed pension within a SIPP, HL is a great option. Its Ready-Made Pension Plan is also low-cost and means you avoid dealing charges.

Capital at risk if you invest. FCA regulated and FSCS protected.

Next we look at the cheapest SIPP provider for specific investments in isolation.

To do this, our team of finance experts (who have over 30 years of professional finance and investment experience) modelled the impact of costs with various SIPP platforms for different types of investments. These include index funds, mutual funds, individual stocks and shares and bonds.

Read on for the lowest cost SIPP for each type of investment.

Cheapest SIPP provider for mutual funds

When many investors talk about funds, they’re referring to mutual funds (sometimes known as unit trusts). 

These are run by fund managers who make investment decisions with the intention to outperform the stock market, or to at least match a specific benchmark index. More on mutual funds later in this guide.

If you want to invest in mutual funds, then the cheapest SIPP provider for you depends on how much you have to invest:

Mutual fund investment valueCheapest SIPPAnnual fee with cheapest SIPP
Up to £62,352AJ Bell0.25%
£62,352+Interactive Investor£156 (£12.99 per month)

Note that AJ Bell’s annual cap of £120 on fees for shares, ETFs, investment trusts and bonds does not apply to mutual funds.

This means that investments in mutual funds worth more than £62,352 are cheaper with Interactive Investor due to its fixed monthly subscription pricing.

Up to £62,352 in mutual funds: AJ Bell

For up to £62,352 in mutual funds, AJ Bell is the cheapest SIPP. It charges 0.25% on mutual fund portfolios worth up to £250k. AJ Bell’s dealing fees on funds are low, too, at £1.50. 

More than £62,352 in mutual funds: Interactive Investor

Interactive Investor charges a fixed monthly subscription fee of £5.99 (£71.88 per year) for up to £50,000 of investments. For total investments worth more than £50,000 it charges a monthly fee of £12.99 (£155.88 per year).

Because Interactive Investor’s fee is fixed, its annual fee becomes a lower proportion of your portfolio as your investments grow.

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Talal’s View

CFA Qualified Investment Advisor

If you have £50,001 of funds invested with Interactive Investor its annual charge of £155.88 works out as 0.31%.

But, if you have £100,000 invested then Interactive Investor’s charge works out to 0.16% – which is significantly cheaper than AJ Bell, Hargreaves Lansdown and Bestinvest.

Example: Based on an ISA portfolio of £100,000 invested in funds with Interactive Investor for 10 years and earning an annual return of 8%, you would save £3,173 on fees compared to AJ Bell, £6,503 compared to Bestinvest and a whopping £7,613 compared to Hargreaves Lansdown (ignoring dealing fees).

Interactive Investor’s dealing fees on mutual funds are slightly higher than AJ Bell at £3.99 vs £1.50. But, if you set up regular investing from just £25 per month with Interactive Investor you avoid dealing fees.

Interactive Investor

Interactive Investor’s monthly subscription pricing makes it the lowest cost SIPP provider for large amounts, starting at £62,000 or more.

Capital at risk if you invest. FCA regulated and FSCS protected.

Cheapest SIPP provider for ETFs and index funds

Exchange Traded Funds (ETFs) are low-cost funds which tend to track the performance of a major stock index, such as the S&P 500. They’re sometimes known as index funds (although not all ETFs are index funds). 

Because they track an index, effectively replicating that index in the ETF, they don’t require fund management teams to make investment decisions. So, they tend to be much cheaper than mutual funds and investment trusts.

Due to the different pricing structures of SIPP providers, the cheapest SIPP platform for ETFs depends on how much you have to invest:

ETF investment valueCheapest SIPPAnnual fee with cheapest SIPP
Up to £28,752AJ Bell0.25%
£28,752 to £49,999Interactive Investor£72 (£5.99 per month)
£50,000+AJ Bell£120

AJ Bell charges an annual custody fee of 0.25% on ETFs but caps it at £120, making it the cheapest SIPP provider for any amount above £50,000.

The cheapest way to invest in ETFs outside of a SIPP, such as in an ISA or GIA, is with InvestEngine. They don’t currently offer a SIPP but they do have the lowest cost ISA. Read more in our guide to the cheapest Stocks and Shares ISA, or check out our detailed InvestEngine review.

Up to £50 welcome bonus & up to £2,500 ISA bonus

Over 610 ETFs to invest in. Commission-free.

Use our exclusive link to get a free welcome bonus of up to £50 AND an additional bonus of up to £2,500 when you invest or transfer an ISA at InvestEngine.

Ts&Cs apply. Capital at risk if you invest.

Up To £50 Welcome Bonus & £2,500 ISA Bonus

OFFER: Use our exclusive link to get a free welcome bonus of up to £50 AND an additional bonus of up to £2,500 when you invest or transfer an ISA at InvestEngine.

Ts&Cs apply. Capital at risk if you invest.

Cheapest SIPP for investing in shares

If you want to start stock-picking to build a portfolio made up of individual stocks and shares then we cover the cheapest SIPP providers for you below. 

Note that this also applies to investment trusts which are charged in the same way as for shares by investment platforms.

Shares investment valueCheapest SIPPAnnual fee with cheapest SIPP
Up to £28,752AJ Bell0.25%
£28,752 to £49,999Interactive Investor£72 (£5.99 per month)
£50,000+AJ Bell£120

Note that Bestinvest charges a lower price for US shares vs non-US shares. However, due to its £120 per year minimum charge, for smaller amounts Bestinvest is still beaten on price by AJ Bell’s 0.25% charge which is not subject to a minimum fee.

Our analysis looks at holding a shares-only portfolio with the below 4 major SIPP providers, which shows the more detailed version of our table above:

Value of shares portfolioAnnual Platform Charges
AJ BellInteractive InvestorHargreaves LansdownBestinvest
£5,000£13£72£23£120
£10,000£25£72£45£120
£18,000£45£72£200£120
£25,000£63£72£200£120
£28,752£72£72£200£120
£49,999£120£72£200£200
£50,000£120£156£200£200
£100,000£120£156£200£400
£250,000£120£156£200£1,000
£300,000£120£156£200£1,200
£500,000£120£156£200£2,000
£1,000,000£120£156£200£4,000
SIPP price comparison table for shares portfolios.

So, for most share portfolios AJ Bell is the cheapest SIPP provider.

AJ Bell also has a huge range of UK, US and other international shares to choose from. 

Cheapest SIPP for bonds

Bonds are a fixed-income product where you effectively lend money to a government or corporation in return for interest payments. As you get closer to retirement age, you may be more interested in fixed-income investing. 

Typically, bonds are seen as less volatile investments than equities and are an asset to be considered for those seeking a regular income from their investments.

The DIY SIPP platforms in this guide which offer bonds all charge the same price as they do for shares and ETFs. This means AJ Bell and Interactive Investor are again the cheapest SIPP providers depending on the value of your investment:

Bonds investment valueCheapest SIPPAnnual fee with cheapest SIPP
Up to £28,752AJ Bell0.25%
£28,752 to £49,999Interactive Investor£72 (£5.99 per month)
£50,000+AJ Bell£120

It’s worth noting that not all bonds can be traded online – some require you to deal in them over the phone. Investment platforms charge much higher fees for telephone dealing, usually ranging from £20-30 per deal.

Cheapest SIPP for dealing fees

If you plan to choose your own investments and think that you may be buying and selling investments regularly, you need to take into account dealing fees.

High commissions can mean that frequent trading quickly becomes expensive. 

Below are the cheapest SIPP dealing fees for different types of investments:

Investment typeCheapest SIPP dealing fee providerDealing fee with cheapest SIPP
UK shares, ETFs, investment trusts and bondsInteractive Investor£3.99
US sharesBestinvest0.95% of trade value
Mutual fundsHargreaves LansdownFree
Telephone dealingHargreaves Lansdown or AJ BellHL: 1% of deal size, min. charge of £20

AJ Bell: £25
Dividend reinvestmentBestinvestFree

That covers all of our low cost SIPP providers for a range of scenarios. Remember, you can transfer your SIPP between providers.

So, if you start off with one provider and later on your portfolio grows to a size or composition which makes another provider cheaper, then you can just switch from one to the other.

For example, a £50k mutual funds portfolio is cheapest to hold with AJ Bell. But a few years later your portfolio may be worth £60k, in which case Interactive Investor is cheaper and you can switch to them.

SIPP Cashback and Offers

Below is a round-up of the current investment SIPP platform offers (as of March 2024). We aim to update this when offers are updated, added or removed but cannot guarantee their availability.

ISA PlatformOfferLink
AJ BellGet an Amazon voucher worth up to £200 for investing or transferring a SIPP to AJ Bell.Visit AJ Bell.

Ts&Cs apply – full terms here. With investing your capital is at risk.
FreetradeGet a free share worth up to £2,100 with our link.Visit Freetrade.

Ts&Cs apply. With investing your capital is at risk.
MoneyfarmGet cashback of up to £750 if you invest or transfer to Moneyfarm.Visit Moneyfarm.

Ts&Cs apply. With investing your capital is at risk.

Cheapest SIPP Platforms – Fees Summary

Here’s a breakdown in our SIPP comparison table of the platform and dealing fees charged by the providers in our guide (as of March 2024). It’s how we worked out the cheapest SIPP platforms for various investment cases.

SIPP ProviderAnnual platform feesDealing fees
AJ BellShares: 0.25% (max. £10 p/month)

Funds:
Up to £250k: 0.25%
£250k-500k: 0.10%
Over £500k: No charge
Shares: £5 or £3.50 if 10+ share trades in prior month

Funds: £1.50
BestinvestReady-made portfolios & US shares:
Up £500k: 0.20%
£500k-£1m: 0.10%
Over £1m: No charge

All other investments:
Up to £250k: 0.40%
£250k-500k: 0.20%
£500k-£1m: 0.10%
Over £1m: No charge

Bestinvest’s SIPP is subject to a minimum annual charge of £120.
Non-US Shares, ETFs and Investment Trusts: £4.95

US Shares: 0.95% FX fee

Funds: Free
Hargreaves LansdownShares, ETFs, investment trusts and bonds: 0.45% (capped at £200 per year)

Funds:
Up to £250,000: 0.45%
£250,000 – £1m: 0.25%
£1m – £2m: 0.10%
£2m+: 0%
Shares, ETFs and Investment Trust dealing fee based on number of deals in prior month:
0 – 9: £11.95
10 – 20: £8.95
20+: £5.95

Funds: Free
Interactive InvestorSubscription fees:
Pension Essentials: £5.99 per month (max. investment of £50k)
Pension Builder: £12.99 per month (min. £50k)

For existing customers, a SIPP can be added to an Investor Essentials plan for £5 extra per month, and to an Investor plan for £10 extra per month.
£3.99 on all Plans

Non-US international shares charged at £9.99 per transaction for all accounts except Super Investor which is £5.99

Dividend reinvestment £0.99 for all plans

Regular investing (min. £25 per month) is free
Moneyfarm1,2Actively Managed Portfolios:
£0 – £10,000: 0.75%
£10,001 – £20,000: 0.70%
£20,001 – £50,000: 0.65%
£50,001 – £100,000: 0.60%
£101,000 – £250,000: 0.45%
£250,001 – £500,000: 0.40%
Over £500,000: 0.35%
N/A for Managed Portfolios

1The fee applied to your balance based on the Actively Managed Portfolio bands above will apply to your entire balance. If you have a balance of £25,000, for example, you will be charged 0.65% on the entire £25,000.
2Moneyfarm’s share dealing service (including mutual funds, ETFs and bonds) is not currently available with SIPP accounts.

That’s a summary of the charges of the main SIPP platforms. Next, we discuss what these charges actually mean and how they work in more detail.

SIPP fees and charges

Keeping costs to a minimum is one of the keys to maximising your long term returns in an investment portfolio which is why it’s important to find the cheapest SIPP provider for your needs.

SIPPs typically come with at least one type of fee you’ll have to pay. Below we outline the main fees to watch out for in more detail.

Custody/Account Fees

These are fees charged by a provider for looking after your investments. They tend to be an annual percentage of the value of your investments, and often the percentage charge reduces with higher portfolio values.

Some providers, notably Interactive Investor, charge a monthly subscription fee instead of an annual percentage custody fee. For larger investment portfolios, fixed subscription prices become cheaper.

Management Fees

You’ll typically see management fees charged by robo-advisors and on ready-made portfolios.

Management fees are usually also a percentage charge on your total investments, and they seek to cover the costs of having a team of professional fund managers who oversee the portfolios on offer.

Robo-advisors will typically charge only a management fee, and not a separate custody fee.

Dealing Fees

If you pick your own investments, you will often be charged a dealing fee (or commission) each time you buy or sell an asset. 

It’s important to take into account dealing fees if you think you’ll be a frequent trader, as dealing costs can add up throughout a year. 

All of the SIPP providers in our guide that allow you to pick your own investments charge dealing fees.

If you regularly invest by setting up a direct debit with Interactive Investor, you’ll also avoid all dealing fees (FX charges may still apply on foreign shares).

Underlying Fund Costs

Sometimes known as ongoing fund costs, these are the fees charged by the fund managers who operate the mutual funds, investment trusts and ETFs that you may invest in.

These are independent of your SIPP provider, although some providers negotiate discounted charges for their clients. 

As the name suggests, only funds charge these fees so if you directly invest in shares you won’t incur them.

Transfer Fees

Rather than a profit-making exercise, as they sometimes were in the past, transfer fees are the costs involved in transferring your SIPP investments from one provider to another.

You can transfer a stocks and shares portfolio without having to sell any of your investments if your new provider offers the same investments. This will usually minimise any transfer fees payable, and is known as an ‘in specie’ transfer. 

If your new provider does not offer the same investments as your current provider, your current investments will need to be sold and the cash proceeds will be transferred to your new provider. 

Selling your investments may incur dealing fees, which are part of the transfer cost. You may also have to pay more dealing fees to recreate your portfolio with your new provider. 

For example, transferring a SIPP invested in a ready-made portfolio will likely mean the sale of your ready-made portfolio investments and having to recreate your portfolio with another provider.

Exit Fees

Pensions opened prior to 31st March 2017 may have exit fees payable when they’re transferred. Both personal and workplace pensions set up since then are not allowed to charge exit fees after regulation by the FCA. 

The same regulation by the FCA capped the exit fees which older pensions can charge, which for most people will be 1% of the total value. This may still mean a substantial charge if you have a large pension pot, so we would again suggest you seek personal finance advice before transferring old pensions. 

We recommend Unbiased, who will connect you to an appropriate financial advisor based on your individual circumstances. You’ll also get a no-fee initial consultation.

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SIPP Investments

So, what can a SIPP invest in? When SIPPs were created they were designed to be able to allow individuals to invest in a wide range of assets.

For many people, though, investments in a SIPP will be made up of stocks and shares, funds and bonds.

We set out the main investments you can hold in a SIPP below. 

Stocks and Shares

Otherwise known as equity, shares are certificates of ownership in a company. Owning shares in a company is sometimes known as ‘owning stock’ – and this is what is referred to when you hear about stock exchanges.

The SIPP providers in our guide allow you to invest in listed shares, which are those available to be traded on public stock exchanges such as the London Stock Exchange.

You can invest in individual shares in companies listed on recognised stock exchanges with the SIPP providers in this guide, except for Moneyfarm which is a robo-advisor. You can hold the shares of major companies in your pension, for example if you wanted to buy BP shares.

It’s possible to invest in unlisted, or private, limited companies within a SIPP but this usually requires specialist SIPP providers outside the scope of this guide.

Funds

There are several different types of funds that you can invest in within your SIPP. Essentially, a fund pools together the money of different investors and invests it on their behalf. We briefly explain the main types of fund below.

Mutual Funds

When you hear ‘fund’ mentioned it’s often shorthand for mutual funds, which are a type of investment vehicle which pools together money from different people. The fund manager then invests it on their behalf. 

Mutual funds issue investors with ‘units’, which represent their stake in the fund in proportion to the size of their investments. Sometimes, mutual funds are referred to as unit trusts

Fund managers make investment decisions with the intention of growing the value of the fund and providing investors with a return. They do this by picking investments in various assets such as shares, bonds and property. This is classed as an active fund

Dealing fees on mutual funds tend to be charged at a lower price to those on shares, ETFs and investment trusts.

Investment Trusts

Similar to a mutual fund, investment trusts also pool together the money of investors but they do so in the form of a company with its own board. They’re also listed on a stock exchange so that investors buy shares in the fund rather than units, as with mutual funds.

Investment trusts are also usually active funds. Dealing fees on investment trusts are often the same as for shares.

Exchange Traded Funds (ETFs)

An Exchange Traded Fund is almost always a passive fund which tracks an index. For example, an ETF may track the FTSE100 index and will simply buy shares in proportion to those companies that make up the FTSE100.

The fund’s managers simply replicate the makeup of the index and don’t make investment decisions, unlike with an active fund.

A major benefit of investing in ETFs is that you can get exposure to an entire index without having to buy shares in all of the companies yourself. This saves on dealing costs, and annual fund charges on ETFs tend to be lower than that of mutual funds and investment trusts.

Robo-advisors primarily invest in ETFs to create their investment portfolios.

Dealing fees on ETFs are often the same as for shares.

Bonds

Bonds are a form of debt issued by large companies and governments around the world. UK government bonds are known as gilts.

When you buy a bond you’re effectively lending money to the company or government that issues it. In return, the issuer pays you interest at a rate decided when the bond is launched. It may be a fixed rate or a variable rate that’s linked to inflation, for example.

Government bonds issued by developed countries, such as the UK and US, are considered to be extremely safe investments. Corporate bonds and bonds issued by the governments of emerging market countries tend to be riskier.

Typically, bonds have higher dealing fees than shares and funds, and some can only be traded over the phone with SIPP providers. Phone dealing is much more expensive than online dealing – see our table on dealing fees above.

Gold

Investment grade physical gold can be held within a SIPP. It’s the only commodity or precious metal that HMRC allows you to invest in via a SIPP. 

The SIPP providers in our guide focus on shares, funds and bonds so if you’re interested in physical gold you’ll need to find a more specialist SIPP provider. One such supplier of investment grade gold is Direct Bullion, who have a SIPP gold service.

Commercial Property

HMRC does not allow you to invest in residential property within your SIPP – if you do so, you will face heavy tax penalties and your SIPP provider may face being deregistered.

But you can invest in commercial property. A SIPP is also able to borrow up to 50% of its net value and use the funds to purchase assets, such as commercial property. More on SIPP loans below.

Other SIPP Investments

A wide range of investments can be held within a SIPP. However, some are restricted by HMRC such as residential property and commodities other than investment grade gold, as we outlined above.

Some investments, although allowed, are usually only facilitated by specialist SIPP providers which are outside the scope of this guide. These include investments such as private limited companies, structured products and derivatives (such as CFDs and options).

How to invest through a SIPP

It’s a straightforward process to start investing through a SIPP, but you will need to decide how and what you want to invest in. 

To get started, you’ll need to go through the following steps:

  1. Decide which SIPP provider is best for you
  2. Open a SIPP account with the provider, providing your personal information and ID documents as requested (usually takes no more than a few days)
  3. Fund your SIPP account (more on minimum investments below) and get your 25% government bonus on contributions
  4. Set up a regular contribution if you wish to
  5. Choose what to invest in and start investing

So although the above process is relatively simple, the key question you’ll need to answer is what you want to invest in. 

How to decide what to invest in

We outline the three main ways you can get started with investing through an investment ISA.

1. Robo-advisors and ready-made portfolios

If you’re a total beginner we recommend starting with a robo-advisor such as Moneyfarm, which is our top-rated SIPP for passive investing. 

Professional investment managers will then look after your money for you. More on how this works below.

2. Pick your own investments

But, if you do want to pick your own investments you’ll need to do some research and decide where you want to put your money. You can invest in shares, funds or bonds and there are, quite literally, tens of thousands to choose from.

This is why we suggest you consider starting out with a robo-advisor, such as Moneyfarm, and you can consider making your own investment decisions further down the line.

But, AJ Bell is our top pick for best SIPP overall for those who want to choose their own investments. It has lots of helpful guides and funds lists to help you get started.

3. Get financial advice

If you want a more personalised recommendation of what to invest in, you can seek professional financial advice from a regulated advisor. 

This will come with a fee, but you will get a full breakdown of your financial position and a recommendation of what to invest in, and why it’s appropriate for you. 

You can also pay for annual portfolio reviews by your financial advisor where they will recommend if you should buy or sell any investments, and ensure that your portfolio is still appropriate for you.

We recommend Unbiased if you want to find a financial advisor. 

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If you’re unsure of your options or financial position you should seek professional advice. Unbiased has over 27,000 financial experts – simply enter your details and they will match you to the best financial advisor for your needs, including a no-fee initial consultation

Ethical investing

Beyond just choosing whether to invest in shares, funds or ETFs (or a combo of the three), you may also want to consider the ethical impact of your investments. 

Ethical investing has been getting a lot of attention in recent years. It’s also sometimes known as ‘impact investing’, socially responsible investing (SRI) or ESG investing (Ethical, Sustainability and Governance).

Whatever you prefer calling it, there’s no doubt it’s a growing part of investors’ concerns. For more on this, check out our guide to the best Ethical Stocks and Shares ISAs.

How do managed SIPPs work?

With managed SIPPs the hard work is done for you. Investment professionals put your money into a ready-made portfolio which they manage over time with the aim of growing its value.

Each portfolio they offer has a different level of risk attached to it. 

It’s easy to get started – you go through the process to open an SIPP account with a robo-advisor, as we outlined above, and then you’ll be asked to complete a questionnaire based on your attitude towards risk.

The robo-advisor takes this information and decides which ready-made portfolio is right for you based on your answers. Your money is then put into this portfolio and professional investment managers look after it over time. 

Picture of Talal's View

Talal’s View

CFA Qualified Investment Advisor

Robo-advisors tend to follow the standard theory of portfolio management, with what are called long-only portfolios. A long-only portfolio just means that they only buy investments, they cannot short-sell stocks and shares (bet against their prices).

When deciding risk levels, they will allocate the portfolio’s funds between equities (shares, via ETFs) and bonds (corporate and government debt). The more equity in the portfolio, the higher risk it is perceived to be, as equities are typically a more volatile investment than bonds. For lower risk portfolios bonds will take up a larger slice of the allocation, particularly government bonds as these are considered super-safe investments.

There’s more that goes on behind the scenes, such as country allocation and liquidity management. But portfolios offered by robo-advisors are already set up in accordance with these general principles and your money will be put into one of them once you’ve completed the questionnaire. This is what makes them ‘ready-made’ portfolios.

Robo-advisors are a low-cost, convenient way to get your money invested without you having to spend time doing your own research and rebalancing your portfolio yourself.

Our top pick SIPP robo-advisor is Moneyfarm, and they make it very easy to get started.

Moneyfarm's questionnaire in the app
Moneyfarm’s risk questionnaire

You just need to complete your answers to their questionnaire and they will determine a suitable portfolio for you.

Read more about robo-advisors and ready-made portfolios in our guide to the best robo-advisors in the UK.

Another great option is Hargreaves Lansdown’s Ready-Made Pension. Not only is it a fully managed pension, but it also includes rebalancing of your investments as you approach retirement.

Hargreaves Lansdown

The UK’s largest retail investment platform, Hargreaves Lansdown, is also a great option for your SIPP. It has a massive range of investment options, a superb app and recently launched the HL Ready-Made Pension Plan.

HL’s Ready-Made Pension Plan operates in a similar way to ‘standard’ personal pension providers where experts not only invest your money for you but rebalance it as you get closer to retirement. This is something you’d typically have to do yourself with a SIPP. 

So for a fully managed pension within a SIPP, HL is a great option. Its Ready-Made Pension Plan is also low-cost and means you avoid dealing charges.

Capital at risk if you invest. FCA regulated and FSCS protected.

Picture of Talal's View

Talal’s View

CFA Qualified Investment Advisor

As you approach retirement age, standard pension providers will seek to move your investments to lower-risk assets.

This is to protect the value of your pension as you get closer to being able to access it. Typically, this involves gradually moving your portfolio away from equities and towards fixed-income.

Fixed-income products, usually bonds, tend to have lower volatility than equities. You may have seen big drops in stock market values in the past, such as at the peak of the covid pandemic. Bond markets, however, usually remain more stable during periods of turbulence (although it’s not always the case). 

With a SIPP, you’re in control of your investments. This means any rebalancing will need to be done by you – unless you choose to invest in a fully-managed pension within your SIPP.

So for a fully-managed SIPP, Hargreaves Lansdown’s Ready-Made pension is a great option.

Next we cover more about pensions in general – what they, how they work and why they’re so good as a tool to save for your future.

Some Pensions Basics

There are two broad types of pension in the UK – a private pension and the state pension.

The state pension is funded and administered by the government. It’s based on your National Insurance contributions and pays out a regular income when you reach state retirement age.  Currently, this is 66 for those born before 5 April 1950. For those born after this date it’s 67 and will eventually increase to 68.

A private pension is any pension that’s not the state pension, and they can be split into two categories: workplace pensions and personal pensions.

Workplace pensions are set up by employers for the benefit of their employees. Your employer pays into the workplace pension for you and you can make additional contributions from your pay if you wish. You can usually change your level of contribution to suit your needs.

What is a Personal Pension?

A personal pension is a type of private pension that’s controlled by you – not by an employer or the government.

You choose which provider to open it with, how much to pay into it and how to invest it. It doesn’t mean you have to pick investments yourself – you can choose to invest your money with a professional pension scheme or to take the advice of a financial advisor. 

Ultimately, though, you have a lot more flexibility with a personal pension than a workplace or state pension. A SIPP is a type of personal pension – more details on this below.

Pensions Tax Relief

One of the major advantages of paying into a personal pension is that the government adds 25% to your contributions. The bonus is almost always added automatically by your pension provider (assuming they’re registered with HMRC, which they should be – all the providers in this guide are).

That means if you pay in £100, the government adds £25 so your total pension contribution is £125. This can really add up over time if you make regular contributions and give a big boost to your retirement pot.

Higher and additional rate taxpayers can also claim relief at 40% and 45% respectively on their annual tax return. 

Annual Allowance

There is an annual limit to how much tax relief you can get, though. For most people it’s the lower of £60,000 or your annual income. However, very high earners may see this relief tapered further. 

You may also be able to roll over any unused annual allowance from prior years to the current year, increasing your annual tax free allowance in the current year.

You may have read elsewhere that £60,000 is the maximum you can contribute to all of your pensions in one year. This isn’t true, though. The £60,000 annual allowance only applies to tax relief and tax payable on contributions – there is no legal limit to stop you contributing beyond this so long as you pay tax on these contributions.

So, you can contribute as much as you like into your pension but if the contributions exceed the annual allowance you will not get tax relief and you may have to pay tax on them.

Income and Capital Gains Tax

There’s no income tax or capital gains tax chargeable on your pension investments so long as they’re not on HMRC’s list of tax chargeable assets, such as residential property. 

So investing in shares, funds, ETFs, investment trusts and bonds through a SIPP – as the SIPP providers in this guide all specialise in –  will not be subject to income or capital gains tax. This helps to grow your investments over time as any income from your investments within a SIPP can be reinvested tax-free, and investment gains will also be tax-free.

When it comes to drawing on your pension, however, you may need to pay income tax. The first 25% you withdraw from your pension will be tax-free, but the remaining 75% will usually be subject to income tax at your marginal rate.

Your marginal tax rate is simply the income tax rate that you would pay based on the tax band you fall into if that pension income is added to your employment income.

What is a SIPP?

We talked about the differences between workplace and personal pensions above, so what is a self-invested personal pension (SIPP)?

Well, a ‘regular’ personal pension is where you make contributions into a pension scheme run by a professional pensions investment company. These are often large asset management firms, and your pension investments are managed by their team of professionals.

They will usually assess risk for you, taking into account your age, and adjust your investments over time. Typically, they will move your investments from higher risk assets to lower risk assets as you approach retirement age.

Investments made within a self-invested personal pension, on the other hand, are totally under your control. You make the investment decisions and decide what to invest in, perhaps after taking financial advice from a qualified advisor.

There are also a very wide range of investments allowed to be held in a SIPP, which is one of the reasons they were created – to encourage investment into a wider range of assets.

Because you have control over how your SIPP is invested, that doesn’t mean you have to make your own investment decisions. There are a range of ready-made portfolios and robo-advisor options, such as Moneyfarm, which we’ve outlined above who will invest your money for you based on some initial risk criteria that you pick.

Hargreaves Lansdown also offers a Ready-Made Pension Plan, which is managed by professionals and will even rebalance your portfolio as you near retirement age – much like a traditional personal pension. Its fees are very competitive, too.

Who is a SIPP for?

You may already have a workplace pension – or several if you’ve moved jobs – and expect to make enough national insurance contributions to get some level of state pension. 

But, even with these, will you be able to meet your financial needs in retirement? In other words, will you be able to live a comfortable life in retirement?

The full state pension is currently £10,600 per year, well below the income of someone earning minimum wage full-time. Any workplace pension you have will be in addition to this, but still may not provide you with enough in retirement to be able to enjoy life.

So, saving into a personal pension is a great way to boost your overall retirement pot. Doing so in a SIPP gives you a lot of control over how much to save and how to invest those savings. 

The government bonus and tax-free savings available with SIPPs, and standard personal pensions, make them a great option for growing your retirement pot.

What about a SSAS Pension?

If you’re a company director of a small business, you may want to look into a Small Self Administered Scheme (SSAS) pension instead. 

A SSAS is a type of workplace pension for business owners which is also highly flexible, and may be more advantageous to you than a SIPP if you’re a company director and you meet the SSAS criteria.

The government bonus on contributions and tax-free savings also apply to SSAS pensions.

Our detailed guide ‘What is a SSAS?’ has all the details.

SIPP Inheritance Tax

Pensions have their own set of tax rules (if you ever have trouble sleeping, you can read HMRC’s pension tax manual online) which are designed to encourage people to pay into a pension.

SIPP investments are typically free from income and capital gains tax. Alongside this, there’s government tax relief added to pension contributions. But, another major feature of a SIPP (and other types of pension) is that they don’t count towards your estate for inheritance tax purposes.

Inheritance is a complicated area of tax (as I fondly remember from my tax exams!) but the core principle is that the value of an estate above the threshold (currently £325,000) is taxed at 40% on death. There are a number of rules and exemptions when calculating the value of an estate, but SIPPs are usually excluded from it.

That doesn’t mean passing on a SIPP is totally tax-free, though. If you’re over 75 when you die, the SIPP beneficiary will be liable to pay income tax at their marginal rate on it. But, if you’re under 75 when you die then there’s no income tax payable. 

Estate planning can be a complex area so if you have concerns around inheritance tax and pension planning, we recommend you speak to an expert through Unbiased. You’ll be connected to a regulated financial advisor based on your specific needs, including an initial no-fee consultation.

SIPP Loans & Borrowing Against a SIPP

Flexibility is one of the major advantages of a SIPP vs other types of private pension, and one of the examples of this is the fact that SIPPs are able to borrow money

A SIPP is able to borrow up to 50% of the net value of the fund so long as the borrowing is used to increase the value of the pension pot. 

Typically, a SIPP loan is used to buy commercial property which is then rented out. Rental income goes to the SIPP and is used to pay off the pension loan. However, SIPP loans can be used to purchase virtually any type of asset, such as shares, so long as the pension administrator believes it will increase the value of the SIPP. 

But, although the SIPP loan can be used to buy a range of assets, there are strict HMRC tax rules over certain types of investment. Residential property, for example, is heavily penalised as an investment in a SIPP so getting a loan to purchase residential property is almost certainly not worth it.

To be clear, you cannot personally borrow from your SIPP or against your SIPP. We cover the full details in our guide to pension loans.

SIPP providers minimum investment

AJ Bell and Interactive Investor have very low minimum deposits – and no specific minimum investment so long as you have the cash for the investment price.

There’s no minimum deposit to open an account with Interactive Investor, which is our top pick for cheapest SIPP for mixed investment portfolios worth over £62,000. For regular investing, the minimum direct debit is just £25 per month, and avoids all dealing fees.

The minimum investment with Interactive Investor depends on what you want to invest in. Some funds, for example, have minimum investment amounts but buying shares only requires that you have enough cash to afford the share price of a single share.

Here’s a summary of the providers in our guide:

ISA PlatformMinimum investment
AJ Bell£1 or £25 per month for regular investing
Bestinvest£50 but £100 minimum investment for some funds
Hargreaves Lansdown£100 or £25 per month for regular investing
Interactive InvestorNo minimum deposit, £25 per month for regular investing
Moneyfarm£500

Is investing through a SIPP Safe?

As with all investing, your capital is at risk. That’s no different whether you invest through an ISA, a SIPP or a General Investment Account. 

But, it’s important that your investments are held with reliable and regulated investment platforms. All of the platforms in this guide are regulated by the FCA, which is the UK’s regulator for financial firms.

Your money and investments are also protected under the Financial Services Compensation Scheme (FSCS). This guarantees up to £85,000 if your provider were to go bust. In some cases, pensions have unlimited government protection but this may not apply to newly opened SIPPs.

It’s also important to be aware that you’re able to complain to the Financial Ombudsman Service (FOS) about an FCA regulated company, if you’re unable to resolve a dispute directly with the company. The FOS’ decisions are binding, and should give you extra comfort when choosing a SIPP provider.

There are additional regulatory checks and procedures an investment provider must comply with to offer a SIPP compared to a General Investment Account and even an ISA. 

This is because the government is keen to encourage people to make use of private pensions and therefore wants them to be as safe as possible. SIPPs, as with other private pensions, have tax incentives which are approved by HMRC

As a result, SIPP providers must be registered with HMRC and complete compliance checks directly with them.

So, investing through a SIPP with an FCA-regulated and FSCS-protected provider is one of the safest ways of investing through a pension. Each of the providers in our guide to the cheapest SIPP is FCA-regulated and has FSCS protection.

On top of that, your cash and investments are administered by professional ‘custodians’ and your money is deposited with regulated banks. This keeps your money separate from your provider’s own funds.

As with all investing, though, your capital is at risk. This means the value of your investments can go down as well as up. But, over the long term, stocks and shares have historically risen in value.

Cheapest SIPP – Final verdict

That covers the cheapest SIPP providers. 

SIPPs, like other types of private pension, have great tax incentives that help to grow your investments over time. You can contribute up to the value of £60,000 or your total salary into private pensions each year and qualify for tax relief. 

Investments within a SIPP span a wide range of assets and securities, such as shares, funds and bonds, and are not usually subject to income or capital gains taxes. Regular contributions and consistent investing over time has in the past outperformed the returns you could’ve got from savings. 

Costs can play a huge part in your long term net returns, potentially reducing your investment portfolio value by thousands if you stick with an expensive provider. 

If you don’t want to pick your own investments, Moneyfarm is the best value SIPP provider for passive investing.

Moneyfarm

If you want professionals to take care of your SIPP investments for you, then Moneyfarm is our top pick.

It has a strong performance track record, low charges which reduce as your pension pot grows and great customer service.

Capital at risk if you invest. FCA regulated and FSCS protected.

If you do want to pick your own investments, then the cheapest SIPP will depend on how much your portfolio is worth and what you want to invest in.

For mixed portfolios invested in mutual funds, shares and bonds worth under around £62,000, AJ Bell is the cheapest SIPP provider.

AJ Bell

AJ Bell is the cheapest SIPP for mixed portfolios worth under £62,000.

Capital at risk if you invest. AJ Bell is regulated by the FCA and has FSCS protection.

For a mixed portfolios above £62,000, Interactive Investor is usually the cheapest platform due to its fixed monthly fees. 

Their fee remains the same no matter the size of your investment portfolio, so it gets relatively cheaper as your investments grow. Interactive Investor also has great customer service and a free regular investing service which avoids dealing fees.

Interactive Investor

Interactive Investor is the cheapest SIPP platform for mixed portfolios worth more than £62,000.

Interactive Investor is regulated by the FCA and has FSCS protection.

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Capital at risk if you invest. Interactive Investor is regulated by the FCA and has FSCS protection.

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