SIPP Withdrawal Rules UK: When You Can Access Your Pension (2026 Guide)

Updated for 2026 🏅

Introduction

SIPPs (self-invested personal pensions) have been around since 2005 and are a great way to save for retirement. If you're reading this, you've probably been diligently saving into your SIPP for years. But when can you actually access that money and what are the rules?

Firstly, the current withdrawal age is currently 55, which is rising to 57 in 2028. Taking money out before then will incur penalties and should only be done as a last resort.

When you do reach withdrawal age you are free to start taking money from your SIPP, starting with a 25% tax free lump sum. Beyond this, you can access more of the funds through Flexi-Access Drawdown, an Annuity, or an Uncrystallised Funds Pension Lump Sum, all of which we'll cover below.

The different options sound somewhat confusing and it can be difficult to know what they mean in your circumstances. For that reason, we've put together this guide which covers everything you need to know about SIPP withdrawal rules in the UK. Whether you're approaching retirement or simply trying to get decades ahead of your retirement planning, we've got you covered.

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What age can you withdraw from a SIPP?

You are currently able to start withdrawing from your SIPP without incurring penalties from age 55. This applies to almost all SIPP holders, so if you're reading this it's most likely you.

The exceptions are a very small proportion of people who have a lower mandated retirement age (eg 50). This applies to certain jobs like professional athletes and firefighters where early retirement is very common and thus have a Protected Pension Age (PPA).

There are also some exceptions for extreme ill health and inherited SIPPs, which you should take individual advice on.

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Proposed Changes

Changes coming in 2028 will see this age rising. From April 6, 2028 onwards the minimum age will increase to 57. The reason for this is in order to align with rising life expectancies, higher working ages and the rise of the state pension age to 67.

The government hope this will encourage longer working lives and ensure that pension savings last longer into retirement. This means that if you are born after April 5, 1973, you'll be affected by this change.

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Why are SIPPs designed like this?

If you're under 55, you generally cannot access SIPP funds without incurring penalties. This is by design: SIPPs are meant to be for building your own retirement pot to sit alongside or replace a workplace pension.

If you are planning to need to make withdrawals before then, you should be using an alternative vehicle like an ISA.

These are taxed on the way in (ie you are investing money that has already been taxed) and tax free on the way out (withdrawals do not incur tax penalties) whereas pensions are vice versa.

Be very careful of fraudulent advisers promising early SIPP withdrawals; this is a common scam and will lead to illegal withdrawals, large tax penalties and a significant loss of capital. When in doubt, take professional advice from a regulated institution.

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SIPP Withdrawal Options: How to Take Your Money

As we discussed, once you do make the decision to withdraw funds from your SIPP and you are past the required age, you have a number of different options. Let's go through them individually.

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1. Tax Free Lump Sum (PCLS)

This is your first port of call. When you hit SIPP retirement age, you become eligible to take the first 25% of your SIPP as a tax free lump sum. This means you'll receive it as one chunk of cash without incurring any tax.

This is known as a Pension Commencement Lump Sum (PCLS) and you can take it in one go or in chunks of your choosing that add up to the total. However, there is a caveat.

The maximum PCLS you can take is £268,275 (derived from a since abolished Lifetime Allowance of £1,073,100).

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2. Flexi-Access Drawdown

This similar to the Pension Commencement Lump Sum but is focused on income.

It allows you to take flexible withdrawals as income so that they are smoothed out. As before, the first 25% is tax free and then the rest is taxed as income.

One key advantage here is that the rest of your SIPP remains invested. Obviously it can grow or fall, but over the long term you'd expect it to continue to appreciate in value.

This is the most flexible option. However, note that going for this option triggers something called the Money Purchase Annual Allowance (MPAA). Once you start flexi-access drawdown, you can only contribute £10,000 per year thereafter to defined contribution pension schemes without facing tax charges. This can not be carried forward.

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3. Annuity

The annuity option allows you to convert your SIPP into a guaranteed income for life.

As before, first you take the 25% tax free lump sum, and then with the balance you buy an annuity. The key advantage here is that you get smooth fixed income with predictability. Of course, the trade off for that is that you're sacrificing flexibility.

Who should take this option?

You should make this choice if you're concerned about outliving your pension and not having enough money in your final years. It will continue for as long as you live, but be aware, once activated it cannot be reversed.

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4. Uncrystallised Funds Pension Lump Sum (UFPLS)

Finally, the Uncrystallised Funds Pension Lump Sum. This is sort of a hybrid approach.

It allows you to take ad-hoc lump sums from an uncrystallised SIPP. Each payment is 25% tax free and 75% taxed. This means that you're spreading your tax free lump sum over the lifetime of the withdrawals rather than taking it all at the beginning.

It is simpler than drawdown for smaller pension pots which is the appeal. Note that it also triggers the Money Purchase Annual Allowance (MPAA) just like flexi-access drawdown.

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Here's a clearer idea of how they stack up:

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SIPP Early Withdrawal Penalties: What Happens if You Withdraw Before 55?

Now we've covered legitimate pension withdrawals, let's take a look at what happens if you withdraw income from your SIPP before you hit age 55.

Warning: now's the time to say it. HMRC will levy a 40% unauthorised payment charge if you take money out early. On top of that, your SIPP provider will deduct a 15% scheme sanction charge.

This means that unauthorised early withdrawals will be penalised by a staggering 55%. So it is incredibly inadvisable to take this course of action.

There are a couple of exceptions for extenuating circumstances:

1. Terminal illness: you may be allowed to make early withdrawals if you have a life expectancy of less than 12 months
2. Serious ill-health: this means you're entirely unable to work and again, have a life expectancy of less than 12 months
3. Small pots rule: under some conditions, you may be able to withdraw from pots under £10,000

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We've said it before, but be incredibly careful about schemes offering early access to pension withdrawals. They are 99% scams. Common red flags can include cold calls, pressure tactics and promises of "loopholes."

When in doubt, consult the FCA official guidance on pension release scams. You can still be punished for this even if you didn't realise you'd broken any rules or you try and reverse it immediately by replacing the withdrawn funds, so exercise extreme caution.

FCA authorised advisers will always be happy to explain the full consequences of making any pension withdrawals and provide alternative solutions which may also be in your interests.

Example: if you inadvertently withdraw £50,000 from your SIPP at the age of 50 after taking bad advice, you will be penalised £20,000 by HMRC and £7,500 by your SIPP provider, leaving you with just £22,500, or 45% of your original withdrawal.

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How Much Tax Do You Pay on SIPP Withdrawals?

If you refer back to the withdrawal options, you’ll remember that there are a number of different ways to take withdrawals from your SIPP, each with different tax consequences. Let’s review them again with some specific examples to help you visualise how much you might pay.

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Tax-free Portion (25%):

Across the options, the first 25% was tax free, whether you decided to take this in one lump sum or in smaller stages to smooth it out.

‍Example: in a £100,000 withdrawal, £25,000 would be tax free, whether you took this in one chunk or in smaller payments.

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Taxable Portion (75%):

The remaining 75% is fully taxable at your income tax rate. This is important because income is taxed differently to dividends or other payments. It is added to any other income you might be taking in that tax year and taxed at your marginal tax rate.

So if you’ve already used up your personal allowance or your basic rate tax band, you’ll be taxed at a higher rate.

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Tax Band Examples (2026/27 tax year):

‍Example 1: Basic rate taxpayer

• Other income: £20,000/year
• SIPP withdrawal: £30,000 (£7,500 tax-free, £22,500 taxable)
• Total taxable income: £42,500
• Tax: 20% on £22,500 = £4,500
• Net received: £25,500 after tax

Example 2: Higher rate taxpayer

• Other income: £60,000/year
• SIPP withdrawal: £40,000 (£10,000 tax-free, £30,000 taxable)
• Total taxable income: £90,000
• Tax: Some at 20%, some at 40%
• Net received: ~£26,000 after tax

💡 KEY INSIGHT

Smart strategy: if you’re at the point of retirement, you should consider withdrawing your SIPP income in tax years where you have lower income to minimise tax. 

For example, if you strategically take income in the year between stopping working and beginning to claim State Pension, you’ll make maximum use of the personal allowance and lower income tax bands.

Note that in this case, you may be erroneously taxed with what’s called “emergency tax.” You are able to claim this back using the government website with Form P55 or Form P53Z. 

This can take a couple of months to credit your account.

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Money Purchase Annual Allowance (MPAA): What You Need to Know

You’ll remember we mentioned that using flexi-Access drawdown would trigger MPAA. So what exactly does this mean?

Well, once you begin taking flexible withdrawals from your SIPP, either via flexi-access drawdown or uncrystallised funds pension lump sum, MPAA is activated (note that taking your 25% tax free lump sum only will not do this). 

Once this has been triggered, your annual pension contribution limit drops down from the £60,000 standard allowance to £10,000 flat. 

Note that this applies across all your pensions and lasts for the remainder of your life. 

So for all intents and purposes, you will be entering the drawdown part of your life and leaving the accumulation part, from a tax perspective at least. Framing it like this allows you to have more certainty in making the decision.

This is because it makes it very difficult to rebuild a pension that you have been drawing down from, which is important for those who want to continue working while they take money out of their SIPP. 

As expected, high earners, particularly additional rate tax payers are hardest hit.

Example: Sarah takes £10,000 from her SIPP drawdown age 56, triggering the MPAA. She continues working, where she earns £80,000 / year. She is now only able to contribute £10,000 / year to her pensions instead of £60,000, limiting the tax relief she has available to her.

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By using your Strabo dashboard, you can track pension values and withdrawals in one place, ensuring you stay within your annual allowance. Try it for free here.

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How to Withdraw Money From Your SIPP: Step by Step

Step 1: Check Eligibility

• Confirm you’re 55+ years of age
• Review your SIPP balance 
• Decide which of the withdrawal options we covered suits you best

Step 2: Contact Your SIPP Provider

• Request the withdrawal forms from your provider
• Most providers now have online portals: check if you can withdraw here
• Check if you need to sell investments first (take advice if necessary)

Step 3: Decide Withdrawal Method

• Pick tax-free lump sum amount
• Choose drawdown setup (if you’re choosing flexibility)
• Get an Annuity quote (if you’re buying guaranteed income)

Step 4: Consider Tax Implications

• Calculate your expected tax bill carefully
• Consider whether you want to spread withdrawals across tax years
• Consult a registered financial adviser if this is for large amounts

Step 5: Complete Your Withdrawal

• Submit the forms you’ve completed with the above information
• Wait 2-4 weeks for the money to arrive
• Remember to check the first payment for emergency tax

Step 6: Track Your Pension

• Connect your pension and cash accounts to Strabo
• Monitor your remaining balance
• Review investment strategy if you’re keeping funds invested

Track your SIPP alongside your other investments with Strabo. Get started today for free and see your complete financial picture in one dashboard.

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SIPP Withdrawal Rules: Key Takeaways

7 key takeaways from our guide:

1. Standard SIPP withdrawal age: 55 (rising to 57 in 2028)
2. 25% tax-free, 75% taxed as income
3. Four main withdrawal options: lump sum, drawdown, annuity, UFPLS
4. Early withdrawal before 55: 55% tax penalty (with rare exceptions)
5. Emergency tax often applied on first withdrawal (can reclaim)Flexible withdrawals trigger £10,000 MPAA
6. Plan withdrawals strategically to minimize tax

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Frequently Asked Questions About SIPP Withdrawals

Q: Can I withdraw my SIPP before 55?

A: Generally no, except for terminal illness or serious health issues. Early withdrawals face a 55% penalty 

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Q: Do I have to withdraw my entire SIPP at age 55?

A: No. You can leave your SIPP invested and only withdraw what you need. In fact, most people use drawdown for flexibility. 

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Q: Can I take more than 25% tax free?

A: No. HMRC is hard on this limit and you will be penalised for exceeding it

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Q: What happens to my SIPP if I die before withdrawing? 

A: Your SIPP will pass down to your beneficiaries like any other asset. If you die before the age of 75, they will inherit tax-free. If you die after 75, it is taxed as income tax. 

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Q: Will my SIPP withdrawal affect my state pension?

A: No. SIPP withdrawals don’t affect eligibility for state pension or the amount you receive.

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Q: Can I keep contributing to my SIPP after I start withdrawing?

A: Yes, but flexible withdrawals trigger the Money Purchase Annual Allowance, limiting future contributions to all pensions to £10,000 instead of £60,000.

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Last updated: February 5, 2026