AI Discovery Summary

A SIPP allows UK savers to hold a broad range of investments inside a tax-advantaged pension wrapper, including UK and global shares, ETFs, OEICs, Investment trusts and bonds.

Commercial property and real estate investment trusts are permitted, but residential property and most tangible Assets fall outside HMRC rules and can trigger heavy tax charges.

Investment choice within a SIPP varies by provider: low-cost online platforms typically offer thousands of funds and listed securities, while full SIPPs add commercial property.

Investors should weigh Diversification, currency risk and platform charges alongside FCA warnings on high-risk and Illiquid assets in pensions.

Key Takeaways

  • SIPPs can hold UK and overseas shares, ETFs, OEICs, unit trusts, investment trusts, gilts, corporate bonds, REITs and commercial property within HMRC rules.
  • Residential property held directly is not permitted and can trigger unauthorised payment charges of up to 70% of the asset value.
  • Tangible moveable assets such as fine wine, art, classic cars and antiques are excluded for most SIPPs under HMRC rules.
  • Unlisted shares may be allowed in some full SIPPs but require strict valuation, Due Diligence and Trustee approval.
  • ETFs domiciled in the EU or US can be held by UK SIPPs, but US-listed ETFs are restricted to professional clients under UK PRIIPs rules unless KID documents exist.
  • Currency conversion fees, custody charges and dealing commissions can erode returns on international shares within SIPPs.
  • The FCA has repeatedly warned about high-risk, illiquid investments being marketed to pension savers; ScamSmart is a useful resource.

The single biggest reason UK savers open a Self-Invested Personal Pension is investment choice. Where a standard personal pension typically offers a curated range of insured funds, a SIPP unlocks the wider universe of UK and global listed securities, collective investment funds, fixed income and, in some structures, commercial property. For investors used to running an ISA or general investment account, the experience inside a SIPP UK plan feels much the same — only the wrapper is different.

That choice is not unlimited. HMRC defines what counts as a permitted investment for registered pensions, and breaching the rules can trigger penalties that can wipe out a sizeable portion of the asset. The FCA, meanwhile, has spent years warning consumers about high-risk, illiquid and exotic investments being marketed to pension savers, and has tightened rules on investment pathways and consumer duty to reinforce that message.

This guide examines what can — and cannot — sit inside a SIPP in 2025/26, with a focus on the three most common assets: shares, Exchange-traded funds and collective investment funds. It also covers commercial property, REITs, gilts and corporate bonds, alongside the practical costs and considerations for UK investors.

Shares You Can Hold in a SIPP

Most SIPP providers allow direct holdings in UK shares listed on the London Stock Exchange Main Market and AIM, as well as major international markets such as the New York Stock Exchange, Nasdaq, Euronext and Deutsche Boerse. Smaller exchanges and pink-sheet stocks are typically excluded.

Dividends paid into a SIPP are received free of UK income tax. Foreign dividends may have Withholding tax deducted at source — for example 15% on US dividends under the US/UK tax treaty when a W-8BEN is in place — but the pension wrapper itself does not levy further UK tax.

Trading costs vary. Online SIPPs commonly charge £5 to £12 per UK share deal, with international trades often higher and subject to a foreign exchange spread of 0.5% to 1.5%. AIM shares and smaller companies may carry wider bid-offer spreads, increasing the real cost of trading.

ETFs Inside a SIPP

Exchange-traded funds are widely held in SIPPs because they combine low ongoing charges with intraday Liquidity. UCITS-compliant ETFs domiciled in Ireland or Luxembourg are typically the default choice for UK retail SIPP investors, as they carry the Key Information Document required under UK PRIIPs rules.

US-listed ETFs are generally restricted to professional clients in the UK because most do not produce a PRIIPs KID. UK retail SIPP investors can usually achieve similar exposure through the London-listed UCITS version, often issued by the same provider.

ETF charges include the ongoing charges figure (often 0.05% to 0.40% for broad Equity trackers), the bid-offer spread, dealing commission and any platform percentage fee. Synthetic ETFs add counterparty considerations; physical replication is more common for core equity exposure.

Funds: OEICs, Unit Trusts and Investment Trusts

Open-ended investment companies and unit trusts are the workhorses of UK fund investing and are universally accepted in SIPPs. They are priced once a day, settle in two Business days and typically charge an ongoing charges figure of 0.40% to 1.20% depending on whether the strategy is active or passive.

Investment trusts are closed-ended companies listed on the London Stock Exchange. They can use gearing (borrowing) to amplify returns and trade at premiums or discounts to net asset value. Inside a SIPP, investment trusts often carry the same dealing commission as ordinary shares.

Some SIPP platforms offer super clean fund share classes with lower ongoing charges in exchange for higher platform fees. Comparing the total cost — platform plus fund — is essential when choosing between OEICs, ETFs and investment trusts.

Bonds, Gilts and Cash

UK gilts and corporate bonds can be held directly in a SIPP. Gilts pay coupons gross inside a pension wrapper, and the lack of Capital Gains Tax is largely irrelevant to gilts (which are CGT-exempt anyway) but relevant to corporate bonds.

Bond funds, including gilt funds, strategic bond funds, High-Yield Bond funds and short-duration funds, are also widely available. They allow diversified fixed-income exposure at a low ticket size.

Cash can be held inside a SIPP, usually at minimal or zero interest. Some providers offer access to fixed-term cash accounts or Money Market funds for cash-heavy portfolios. Note that FSCS protection on SIPP cash is generally £85,000 per banking authorisation, applied at the underlying bank.

Commercial Property and REITs

Direct commercial property — offices, retail units, warehouses, factories and some agricultural land — is permitted in a full SIPP. Many UK business owners use this feature to hold their own trading premises in a SIPP, with the business paying market rent to the pension.

Such arrangements require professional valuation, Lease structuring, VAT analysis, environmental assessment and ongoing compliance with HMRC rules. Administration fees from specialist SIPP trustees can run into thousands of pounds a year.

REITs offer a simpler alternative. A UK or international REIT is a listed company that pays out most of its rental income as dividends. Inside a SIPP, the property income distributions (PIDs) usually paid by REITs are received without the 20% withholding tax that applies in taxable accounts.

What You Cannot Hold in a SIPP

Residential property is the most well-known restriction. Holding a house, flat or holiday let in a SIPP — even indirectly through a special purpose vehicle — triggers an unauthorised payment charge of 40% on the member, a 15% Surcharge and a scheme sanction charge, potentially totalling around 70% of the value involved.

Tangible moveable assets such as fine wine, art, antiques, classic cars, jewellery and gold bullion (other than investment-grade gold meeting specific criteria) are generally excluded. The taxable property rules in HMRC Pensions Tax Manual set out the detail.

Cryptoassets are not explicitly banned, but most SIPP providers do not offer them, and FCA promotional rules and high-risk investment classifications make them unusual in pension wrappers. Unlisted shares require strict due diligence and are not accepted by most low-cost online SIPPs.

Diversification, Costs and What Investors Should Consider

Diversification matters as much inside a SIPP as outside. The FCA has highlighted concentration risk in self-directed pensions, where members hold a small number of individual shares or a single thematic ETF. A diversified core of global equity and fixed-income exposure, supplemented by satellite holdings, is a widely cited starting framework.

Costs compound. A 1% annual charge can reduce a 25-year retirement pot by around a fifth compared with a 0.25% charge, all else equal. Total cost includes platform fees, fund OCFs, dealing commissions, FX spreads and any drawdown charges.

Investors should match SIPP holdings to Risk tolerance, time horizon and other accounts. The MoneyHelper and Pension Wise services offer free, impartial guidance, and FCA-authorised advisers can provide regulated recommendations where required.