Warning for people with money held in self-invested personal pensions

SIPP savers urged to check the rules

AJ Bell has issued a warning over the common mistakes people make when they use Self-Invested Personal Pensions (SIPPs). With pensioners warned over rules that could count them out, the investment platform says it's worth exploring the most common questions and answers.

Sarah Coles, head of personal finance at AJ Bell, said: "Since their launch in 1990, self invested personal pensions have changed significantly. Nowadays they appeal to huge numbers of people looking for the flexibility they need to take control of their pension. However, there are still millions of people who have yet to get to grips with what they have to offer."

A SIPP is a type of personal pension that allows you to choose from a much wider range of investments than many traditional pension arrangements. Depending on the provider, this can include funds, investment trusts, shares, exchange traded funds, bonds and gilts. The Government also provides tax relief on contributions, helping to boost the amount invested for retirement.

For most people, the annual pension allowance is £60,000. However, there are rules around earnings and total contributions, with payments made by an employer or someone else counting towards the allowance. Those without earnings can still receive tax relief on contributions, with a £3,600 allowance.

Under the carry forward rules, unused allowances from the previous three years can potentially be used. But there is an important restriction: you cannot pay in more than your earnings for the year in which you are making the contribution. You must also be a member of the pension scheme during the years from which you are carrying forward unused allowance.

SIPP savers can normally access their pension from age 55, but that minimum pension age is set to rise to 57 in 2028. Up to 25% of a pension pot can be taken tax free, subject to rules, and it can be taken in stages.

Tax return deadline clients with savings above £10,000

Separately, tax experts have issued a warning to self assessment households who earned more than £10,000 from savings and investments. According to financial experts at investment and savings platform AJ Bell, those who earned more than £10,000 in savings and investments outside of an ISA in the past financial year also need to file a return.

There are other circumstances in which you need to self assess, such as if you need to repay some of your Child Benefit, or you earned money on the side, such as from selling online. You must file a tax return for the 2025/26 tax year if you worked for yourself and earned more than £1,000, had to pay capital gains tax on something you sold or transferred for a profit, or had to pay the High Income Child Benefit Charge and do not pay it through PAYE. There is also the need to file if you are a partner in a business partnership.

Key points reported by the Daily Express: HMRC’s deadline for filing self assessment tax returns online is January 31, 2027 for the tax year April 6 2025 to April 5 2026. As Charlene Young, of AJ Bell, explained, the £150,000 high earner rule has been removed for those whose only income is taxed under PAYE, but you must keep HMRC informed of changes in your circumstances to avoid fines.

HMRC’s interest rate on unpaid tax is 7.75% annually. If you owe £30,000 or less, you can arrange a payment plan online.

The guidance came as HMRC continues to urge liable households to file returns before the deadline. While workers whose only income is a PAYE wage may not need to file, many others do, and the threshold is lower than many expect.