Can I transfer an ISA to a SIPP?

You can't move money directly from an individual savings account (ISA) to a self-invested personal pension (SIPP) because they are treated differently for tax. 

However, you can take money out of your ISA and then put it into your SIPP. This isn't a straightforward transfer, and you should think about tax benefits and allowances when doing this.

ISAs are tax efficient. When you withdraw money from your ISA, the withdrawals are tax-free because the contributions you make to an ISA are from income that has already been taxed, so the government has no need to tax it again. Once you put this money into your SIPP, you can claim tax relief on pension contributions up to 100% of your relevant earnings or £2,880 net contribution, whichever is higher. This effectively means the government is topping up your pension. 

This re-investment can be advantageous if you expect your income to be lower in retirement than it is now, potentially placing you in a lower tax bracket and reducing the tax you’ll pay when you claim your pension. 

Bear in mind that the tax you pay will depend on your personal situation and could change over time.  

While you can't directly transfer from an ISA to a SIPP, moving your money might still be beneficial, depending on your individual circumstances. If you are unsure, you should consult with a financial adviser for professional support.

Advantages

There are some advantages to moving your money into a SIPP, including:

• Tax relief on contributions. Aviva's pensions only accept contributions that qualify for tax relief. The limit for this in each tax year is 100% of your earnings or £3,600 - whichever is higher. So, even if you don't have any earnings, you can still pay in £3,600 into a pension. There's also a limit on how much you can build up in pension benefits (from all sources including your employer) into a pension without paying a tax charge. This is called the annual allowance. For 2024/2025 the annual allowance is usually £60,000, but will depend on your personal tax circumstances. If you don't use all your allowance it is normally possible to carry it forward into the following tax year. Find more information about SIPP tax relief and allowances.
• Increased investment choices. SIPPs can give you more investment choices than ISAs, including commercial property and more complex investments, which might lead to better returns based on what you choose to invest in and how the markets perform.

Risks and considerations

There are also a few things to watch out for when moving your money from an ISA to a SIPP, including:

• Early withdrawal. Moving money to a SIPP means you can't touch it until you're 55 (or 57 from 2028). Most schemes, including Aviva's, won't allow you to access your pension money before you reach that age, unless you qualify on grounds of ill-health or serious ill-health.
• UK income tax. While you get a tax break when you put money into a SIPP and can usually withdraw 25% of it tax-free, you then have to pay UK income tax when you withdraw the rest of the pension. This isn't the case with ISAs, where withdrawals are tax-free.
• Contribution limits. You also need to watch out for the limits on how much you can put into your SIPP each year, which is usually £60,000 or 100% of your relevant earnings, whichever is lower. Going over this limit can lead to extra tax charges. You can't pay more than your earnings into an Aviva pension, because the excess wouldn't qualify for tax relief.
• Market risk. It's important to remember that, as with all investments, the value of your SIPP can go down as well as up, and you may get back less than you invested. Values of investments are affected by charges and market conditions.

To move your ISA savings to a SIPP, here's what you should do:

• Think about how much you want to take out of your ISA. Remember, some ISAs might charge you for taking out your money early, especially if it's a fixed-term ISA.
• Next, put the money you took out into your SIPP. Make sure the total amount you contribute, including this new amount, doesn't go over your annual allowance of £60,000 (subject to any carry forward relief you may have available) or 100% of your relevant earnings, whichever is lower.
• Make sure you make the most of tax relief. Basic rate tax relief goes into the scheme, along with your contribution. If you pay tax at a higher rate than that, you can claim the rest of your tax relief directly from HMRC, through your tax return.
• It's wise to talk to a financial adviser before you make these changes. They can help you understand the tax rules and make sure you're making the most of your money. This is important to avoid any mistakes that could cost you later. 
• Before withdrawing from your ISA, it's crucial to check if there are any penalties or loss of interest benefits. Some ISAs, especially those that are fixed term or have specific conditions for higher returns, may penalise you for early withdrawals.

While we can’t help you to move your money from your ISA to a SIPP, you might want to consolidate other pension savings you have into a new or existing Aviva SIPP to make them easier to manage.