As you may or may not know, SIPP withdrawal minimum age will be 57 starting from 2028. So I was really angry and wanted to prove myself ISA might be as good as SIPP when it comes to tax efficiency. (Spoiler no it is not)

The methodology and assumptions made for calculations:

- we are investing £1000 every month.
- We are all in
*“higher”*rate while making contributions (For FY 2021/22 this between £50,271 to £150,000) - we get the basic rate tax refund(+£250) 1 month after our contribution and invest this money immediately,
- we get the higher rate tax refund(+£3000) for the year in the 3rd month of the next FY and invest this money immediately
- The market is growing at a theoretical 0.6% per month, and this is calculated every month to include the compounding effect of tax returns.
- For simplicities sake we started both the ISA and SIPP in July, and contributed £1000 for the next 15 years.
**We are below LTA for SIPP**

At the end of the 15 years we’ll have assets worth:

SIPP: £476,994

ISA: £322,532

So all of 322K in the ISA is tax free and what we’ll get out of SIPP depends on how we withdraw, so I did the calculations as, withdraw the initial 25% tax free amount completely, and after that withdraw 40K per year. (Again during withdrawal I am assuming tax bands are same as today including 12500 tax free allowance)

Isa Total | 322532.02 |
|||

Sipp Total Net | 427945.6149 |
|||

Sipp Tax Paid | 10.28% | |||

withdraw | net | remaining | ||

sipp 25% tax free | 119248.7109 | 119248.7109 | 357746.13 | |

annual withdraw | 40000 | 34500 | 317746.13 | |

40000 | 34500 | 277746.13 | ||

40000 | 34500 | 237746.13 | ||

40000 | 34500 | 197746.13 | ||

40000 | 34500 | 157746.13 | ||

40000 | 34500 | 117746.13 | ||

40000 | 34500 | 77746.13 | ||

40000 | 34500 | 37746.13 | ||

37746.13 | 32696.904 | . |

Wanted to share the calculations in case someone is wondering similar questions as myself, and there is a good chance I might have missed something and my assumptions are grossly wrong.

If you see anything odd please point out!

obligatory @Richard.W tag since I know he also likes to dabble in these