ISA vs SIPP: Which tax wrapper should I use?

If you’re a British citizen over the age of 18, there is nothing to stop you from having both an ISA and a Sipp. Both are efficient wrappers to help your investments grow free of capital gains and dividend tax.

But which allowance should you use first? And are there other factors you should consider before setting up either account?

Absolutely. This article will compare the ISA and Sipp wrappers to help you make the best decision. Will be be covering:

The key differences between the Sipp and the ISA tax wrappers Why long-term compounding has a greater impact in the Sipp The restrictions on withdrawing money from your SippInheritance tax

What is a Stocks and Shares ISA?

An ISA is a tax-free savings account. Money saved within the ISA wrapper isn’t charged any tax on capital gains or dividends. All eligible ISA participants receive a £20,000 annual allowance. This renews at the end of each tax year on 5 April and you can’t roll your ISA allowance over into a new tax year. Use it, or lose it. For now, there is no upper limit for how much you...