SIPP, self- assessment and interest on cash

albion22

I opened a SIPP for the first time in this current tax year. I have chosen to hold only cash presently on which I earn interest every month. I am a basic rate taxpayer and over the state pension age now.

I have a couple of questions. Firstly do I have to enter this on an HMRC self-assessment form? Secondly, do I have to declare the interest I get on the cash held within the SIPP?

lisyloo

No.

You face shortfall risk having this in cash (and probably don't get a great rate).
If this is a short term thing e.g. researching investment choices then it's ok short term, but long term your money will go down in real terms,

Albermarle

Everything you earn in a SIPP is free from tax . That includes interest on cash, dividends from investments and capital gains from investments.

You may pay income tax when you withdraw money from the SIPP, but that is a separate issue.

saucer

lisyloo said:

No.

You face shortfall risk having this in cash (and probably don't get a great rate).
If this is a short term thing e.g. researching investment choices then it's ok short term, but long term your money will go down in real terms,

Not necessarily if you hold it in something like short term money markets which consistently beat inflation, at least since the increase in interest rates.

JohnB47

lisyloo said:

No.

You face shortfall risk having this in cash (and probably don't get a great rate).
If this is a short term thing e.g. researching investment choices then it's ok short term, but long term your money will go down in real terms,

I've posted a slightly related question recently. It turns out (from helpful replies) that my wife's Hargreaves Langsdown cash-only SIPP earns 3.4% interest. That's one that is in drawdown mode. A SIPP, not in drawdown, earns 3% currently with HL.

So to say that "you probably don't get a great rate" and " your money will go down in real terms" is not accurate surely?

Perhaps look at the interest rate you're getting on the SIPP?