Bed and SIPP explained

What is Bed and SIPP?

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.

SIPPs are not suitable for everyone as they may be more expensive than other types of pensions. 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. The Best SIPP is designed for people looking to invest at least £10,000 through any combination of one-off investments, regular contributions or transfers from other providers, over a short time frame.

Why carry out a 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.

Tax treatment depends on individual circumstances and is subject to change.

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 was 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 can offset this loss against any other capital gains made this year or in the future.

How does it work?

First, you will need to log into your account online or via the app:

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 for both pension contributions and capital gains tax.
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 will then have to withdraw the cash to your nominated bank account and pay it back into your SIPP online with a debit card if it's a personal contribution.
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 your account online and choose your investments*.

*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. 

If you are not a Bestinvest client:

Remember, SIPPs are not suitable for everyone.  If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you, then a SIPP might not be right for you.

• 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.