SIPP Withdrawal Rules: When and How You Can Access Your Money

By Team SalaryCalculate · 7/10/2025

A Self-Invested Personal Pension (SIPP) offers flexibility in how and when you access your retirement savings. But with that flexibility comes complexity — especially around timing, tax, and withdrawal options. In this guide, we’ll explain the rules for accessing your SIPP, including the minimum age, tax treatment, and different withdrawal strategies.

When Can You Withdraw from a SIPP?

You can usually start withdrawing from your SIPP at age 55 (rising to 57 from 6 April 2028), even if you’re still working.

There’s no obligation to take money out at that age — you can:

Leave your pot invested
Take a lump sum
Start a flexible income (drawdown)
Buy an annuity

Important: You must have reached the normal minimum pension age (NMPA) unless you qualify for early access due to ill health.

How Much Can You Take Out Tax-Free?

You can usually withdraw 25% of your pension pot tax-free. This can be taken:

As a single lump sum
In stages (known as phased drawdown or UFPLS) alongside taxable income

The remaining 75% is taxed as income at your marginal rate.

More: How Much of My SIPP Is Tax-Free?

Withdrawal Options Explained

1. Lump Sum (UFPLS)

Take all or part of your SIPP as a one-off payment
25% is tax-free; 75% is taxed as income

2. Flexi-Access Drawdown

Move your pension into a drawdown pot
Take 25% tax-free upfront (or in stages)
Withdraw taxable income as needed
Keep the rest invested

3. Annuity Purchase

Use your pot to buy a guaranteed income for life
Still receive 25% tax-free lump sum upfront

4. Small Pots Lump Sum

Withdraw whole pensions under £10,000
Up to 3 personal pots allowed with 25% tax-free

Tax on SIPP Withdrawals

Withdrawals (after the 25% tax-free part) are taxed as income, using PAYE.

That means:

Withdrawals may push you into a higher tax band
Emergency tax codes can apply to first withdrawals (often overpay)
You can reclaim overpaid tax from HMRC

Use our UK SIPP Calculator to estimate tax on withdrawals.

Also try our SIPP Withdrawal Calculator for a detailed breakdown of withdrawal options and tax impact.

What’s the Money Purchase Annual Allowance (MPAA)?

Once you start taking flexible income from your SIPP, your annual contribution allowance drops from £60,000 to £10,000.

Triggers include:

Taking income from drawdown
Taking UFPLS (excluding just the tax-free cash)
Buying a flexible annuity

Exceptions:

Taking only the 25% tax-free lump sum
Buying a lifetime annuity with no income flexibility

SIPP and State Pension Age

You don’t need to wait for your State Pension age to access your SIPP. The two are entirely separate. Many people start using their SIPP before receiving the State Pension, then adjust once it begins.

Common Mistakes to Avoid

Withdrawing too much early and paying unnecessary tax
Triggering the MPAA and reducing future pension flexibility
Not considering how income affects other benefits or tax allowances
Forgetting to account for emergency tax on first withdrawals

Summary

You can access your SIPP from age 55 (57 from 2028), with 25% tax-free and the rest taxed as income. Withdrawal flexibility makes SIPPs a powerful retirement tool — but also introduces risks around tax, allowances, and future contributions. Smart planning can help you make the most of your pension pot.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Speak to a qualified adviser before making pension decisions.