Updated: June 11, 2019

How do I set up a SIPP?

Looking for a SIPP and want to know how to get started? This in-depth guide will help you through the process.

Get Started
Ask A Quick Question

Ask A Quick Question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.

FCA Logo
1 of 2
2 of 2 Send!

No impact on your credit score

Tony Stevens

Author: Tony Stevens - Finance Expert

Updated: June 11, 2019

We get a lot of enquiries about how to set up a SIPP, when to open it and associated costs. While a SIPP is a more flexible pension option, the rules, charges and tax allowances can be confusing at first. Many customers come to us after struggling to find the details they need, including how long it takes and how easy it is to set up SIPP.

In this article we’ll cover:

How to open a SIPP

The way you open your own SIPP depends on how you will be paying into it.

If you will be the primary contributor, either through regular monthly payments or because you’ve transferred an existing pension pot over, you can often open a SIPP account online. You then set the account up accordingly to receive regular payments, if that’s relevant.

Where your employer will be making the regular contributions, you will typically need them to fill in a specific form to open your SIPP. If a different third-party is setting up and contributing to your SIPP, a different, separate form will be required before the account is opened.

For more help with these details it can be useful to speak with an experienced SIPP advisor. They can tell you everything you need to know and ensure you make the right decision for your needs and circumstances.

Speak to a expert today

Get Started

How to open a limited company SIPP

The process of setting up a SIPP is exactly the same if you trade as a limited company. Your SIPP provider will want to know whether you plan to make pension contributions directly from your ltd company, rather than making personal contributions.

Are there different types of SIPP I can open?

Yes, there are three main types of SIPPS.

They are:

  • A Full SIPP.
  • A Low-Cost SIPP.
  • A Hybrid, or Insurance SIPP.

When you set up a full SIPP, you will have access to the widest range of investment options including commercial property and individual stocks and shares. However, the charges associated with a full SIPP tend to be a little higher.

A low cost SIPP, as the name suggests, comes with lower charges. The reason for those lower charges is mainly the smaller number of investment options.

If you choose to open a hybrid SIPP, you typically do this through an insurance provider. This will give you easy access to the insurer’s own branded investment funds. However, if you want to add investment from other provides, you’ll be able to do so, but at a cost.

At Online Money Advisor we can put you in touch with a SIPP expert. They will advise you of specific details and help you make the right choice to set up your own SIPP.

What to keep in mind when setting up your SIPP

Once you know what type of SIPP you want, you should then decide on which provider to use. It’s not an easy choice as there are many different SIPP providers and they all offer something slightly different. Those different SIPP accounts have different requirements and eligibility criteria.

Things to consider when planning on opening a SIPP are:

  • The costs associated with setting up and managing your SIPP.
  • How easy it is to manage your SIPP.
  • What online tools are on offer to help you invest with your SIPP.
  • How much support your SIPP provider will give you, both as part of the account or as an extra service.

How to set up a property SIPP

To set up a property SIPP, you typically begin in the same way you would open a full SIPP. The first step is to select a SIPP provider that allows property among the investments you wish to use your SIPP funds to purchase.

Once you do that, you have few options as to how to create your property SIPP. Your options are:

  • To invest in residential property, the most profitable option is to invest in residential property funds or a Real Estate Investment Trust (REIT), through your SIPP.
  • You could invest in commercial property in a similar way, through a new or existing commercial property fund.
  • It’s also possible to buy a commercial property with your SIPP funds, which generates a return through rents and also benefits from no capital gains tax if the value of the property rises.

Property is a popular investment as there are two potential avenues of return generation, while it’s also a tangible asset. That’s something that is attractive to many people who open a SIPP, which is why there are specific residential property investment rules.

It’s worthwhile speaking with a SIPP expert and asking all the questions you have about opening a SIPP or a property SIPP. Get in touch with us today and we’ll connect you with an experience SIPP adviser.

Can I use my SIPP for BTL property purchases?

No, you can’t. SIPP rules include that individual residential property purchases cannot be made through or held in your SIPP. If HMRC assess that an individual property in the SIPP you open is residential, they can tax you on 55% or more of that particular investment.

If you do wish to hold residential property funds in your SIPP it’s important to know the rules and speak with a specialist in this area. They can advise you on how to invest in residential property through your SIPP, without facing a big tax bill.

How much does it cost to set up a SIPP?

SIPP set up costs vary from company-to-company and account-to-account. Low-cost SIPPS will, as you would expect, be the cheaper option. However, the cost of setting up even a full SIPP account, aren’t always too high.

A rough guide is that SIPP set up charges can start from around £50. Expect additional costs going forward, including annual administration charges. While the initial charges for setting up a SIPP may include a set amount of trades or management fees for that first year, plus you’ll likely be charged an annual fee in the future, for the type of account you select.

To find out more detail about how much it costs to set up a SIPP, you could give us a call or make an enquiry. We’ll then put you in touch with an experienced SIPP pension advisor who can give you more information about costs associated with opening a SIPP.

How quickly can I set up a SIPP?

How long it takes to set up SIPP depends on the type of account you choose. If it’s your own account to which you will be the sole contributor, it could take less than 30 minutes to create your SIPP account, online.

Where you’re setting up a SIPP for employer or third-party contributions, the process will likely take longer. The form will need to be filled in by the SIPP account contributor and then processed by the provider you’ve selected. However, if you ensure the paperwork is filled in and sent off promptly, it shouldn’t take too long, for the completion of your SIPP account set up.

How easy is it to set up a SIPP?

Provided you have the relevant information to hand and the investment or contributions in place, it is relatively easy to set up a SIPP. Details you need include:

  • Debit card number.
  • Bank account number.
  • National insurance number.

When you open an online SIPP, for which you will be the contributor, the online form and some confirmation details are all that are required.

If you set up your SIPP for an external contributor, the process will be a little less straightforward. However, that’s mainly because you’ll be reliant on others to provide and submit information.

Online Money Advisor can put you in touch with the right person to give you more details about opening a SIPP. We can help make sure you speak to an expert advisor to gain a clearer understanding of the process of setting up a SIPP – make an enquiry here to get started.

Who can set up a SIPP?

When it comes to who can set up a SIPP, the answer is quite flexible. You can set up a SIPP for yourself. Many of you will also be thinking, can I open a SIPP for my wife or child? The answer is, yes, you can do both of these things.

The forms and details needed to open a SIPP for someone else are similar to what you’d need to set up your own SIPP. But, provided you have the necessary information, you can create a SIPP for a number of people, should you need to.

Another question we often hear is, can I open a joint SIPP?’ Yes, it is also possible to open a SIPP with a joint trusteeship and make a wide range of investments with the account.

Why should I set up a SIPP?

Opening a SIPP isn’t right for everyone. But, there are a number of reasons why setting up a SIPP would work for many different people.

Among those reasons are:

  • You’re a confident investor and wish to be in control of your pension.
  • You have the time to manage your SIPP and do what you can to make sure your pension pot is working hard.
  • You feel your current personal pension isn’t producing as good a return as it could.
  • You want to open a SIPP for a child or relative and ensure they have a good pension in the future.

When should I start a SIPP?

It’s not always easy to know exactly when or how to start a SIPP. But, as with all pensions, the earlier you set up your SIPP, the better for your retirement years. However, while opening a SIPP in your 20s can reap great rewards, it’s not always possible.

With that in mind, any time you feel you want to take more control of your personal pension is a good time to start a SIPP. This could be in your early working years, when you’re heading towards retirement or even when you are retired.

Different accounts could suit you at different times throughout your life, so it can be a good idea to speak with a specialist SIPP advisor to find out your options.

Speak to a SIPP expert today

If you have questions about setting up a SIPP and would like to speak to an expert to find out more, call Online Money Advisor today on 0808 189 0463 or make an enquiry here.

Then, just sit back and relax while we do all the hard work of finding the pensions advisor with the right experience for your specific needs. We don’t charge a fee and there’s absolutely no obligation.

Ask A Quick Question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.

FCA Logo
1 of 2
2 of 2 Send!
Tony Stevens

Tony Stevens

Finance Expert

About the author

Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.

Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Get Started