Bed and SIPP explained

With investment, your capital is at risk.

A Bed and SIPP lets you top up your pension by using your existing investments as SIPP contributions. You simply sell your investments and use the proceeds to open or top up your pension. You can then buy the same investments back, select different ones or simply leave the cash in your account. Whatever you choose, you could benefit from the tax benefits of pensions on your current investments.

Why Bed and SIPP?

The main reason to carry out a Bed and SIPP transfer is to make use of the tax benefits of a pension without investing any new money. Just like ISAs, investments in pensions grow free from both capital gains tax and income tax – so you could have more money left to enjoy in retirement.

Capital gains tax with a Bed and SIPP

When you first sell your investments, any gains you make could be covered by your annual capital gains tax (CGT) allowance – the £12,300 limit will be reduced on 6 April 2023 to £6,000, and then to £3,000 on 6 April 2024. If your gains exceed the allowance, you will pay your usual rate of CGT on the excess. But if you make a loss you could offset any other capital gains made this year or in the future.

How does it work?

If you invest through our Online Investment Service:

1. Sell your current investments up to the amount that you would like to contribute into your pension, making sure you won’t exceed your annual allowance.
2. The cash will usually appear on your ‘Available to invest’ balance after around 3 days for the sale of shares or 4 days for funds. You can then contact our team and they will be happy to transfer the cash from your general investment account to your SIPP account.
3. We will email you when the cash has been added to your SIPP account balance and is ready to be reinvested. Once you have received the email, you can log into the Online Investment Service and choose your investments*.

If you are not a Bestinvest client:

• You will need to open a Best SIPP – our award-winning self-invested personal pension.
• You can do this by opening a SIPP online, downloading and returning the paper application forms or contacting our experts.

*For tax purposes this payment will be considered a personal contribution to your SIPP. Therefore, you will need to sign an Additional Contribution form before completing your Bed & SIPP transfer. 

SIPPs are not suitable for everyone. They may not be right for you if you don’t want to invest across different asset classes or don’t think you will make use of the investment choices available to you. Please contact us for guidance or advice if you are unsure.