This is so simple, I almost wrote a clickbaity type headline. But this is a really simple tip that can save you 20% on (some) of your SIPP fees (the platform ones), but as with anything, there are some assumptions:
- This only applies to the platform fee (percentage or fixed)
- You are currently paying this platform fee from your bank account/card/direct debit
All you need to do is switch your platform fees to come out of your SIPP account. Because you get tax relief on all/any money that goes into your SIPP account, your fees have suddenly gone down by 25% (or more if you are a higher rate tax payer).
Now, its a good idea to have some spare cash in your SIPP account for these fees, otherwise your provider will look to sell some of your investments to cover the charges (and this might also incur trading fees as well). You can avoid this by putting a small amount of cash into your SIPP- the same amount that you were paying from your bank account. It does take approx 6~ weeks for your provider to claim the tax relief from the government, but this should automatically be added to your SIPP account.
£1,000 held in SIPP, with a platform fee of 0.5%, total cost per year of £5.
Paying directly- this remains £5
Top up your SIPP with £4, 25% gets added automatically as a basic rate taxpayer (or more if higher rate), bringing the amount to £5- enough to cover the fees. A saving of £1- which doesn’t sound much, but its 20% cheaper.
Now one assumes that you would moved to a fixed fee provider when its worth it- but if you didn’t, and your SIPP did grow to say £200k, then based on 0.5% fees (£1000 a year), then you would be saving £200!
That’s it, nothing more to it, enjoy the savings!