If you\u2019re on the hunt for a tax-efficient way to invest for the future, you may have come across both SIPPs and stocks and shares ISAs. Both let you choose where your money is invested, and both have tax benefits. But there are some important differences that will affect which one best suits your goals. Our guide summarises the key things to consider.<\/p>
A SIPP<\/a>, or self-invested personal pension, is a type of private pension. Private, or personal, pensions are schemes that you open yourself, as opposed to a workplace pension that is opened via your employer. SIPPs are defined-contribution (DC) pension schemes. As with all DC pensions, the money you pay in is invested. The idea is that your investments will grow over your lifetime, giving you a decent pot to draw on when you retire.<\/p> When you put money into a SIPP, you will benefit from the same tax relief on contributions as you would with any regulated pension product.<\/p> A stocks and shares ISA<\/a> is a type of ISA that lets you put your savings into investments, including stocks and shares, funds and corporate bonds. As with all types of ISA (including cash ISAs) any returns you make on your contributions are free of tax.<\/p>What is a stocks and shares ISA?<\/h3>
SIPP key facts<\/h3>
Stocks and shares ISA key facts<\/h3>