ISA or SIPP?

[unsync]

Aged 57, live in carer for aged parent (AP) so apart from Carer's Allowance, no income therefore non taxpayer currently. NIs are up to date. I have no idea at what point I will officially retire as that is dependent on the death of AP.

I have around £20k in Premium Bonds which I'm going to pull out in the new tax year. I put in the £2880 every year into the SIPP to get the uplift. Would you put the £20k into the SIPP or an ISA? Or something else that I haven't considered? Thanks.

As a non-taxpayer you can pay the £2880 into the SIPP each year - or more if you have earnings income above the £3600 it becomes with the uplift. So I'd be putting the rest in an ISA, the dilemma is whether to go with a fixed rate cash ISA, if you need some or all in easy access, or if it feels right to put some of it in longer term investments. Do you have any other savings?

The advantage of a SIPP is that the tax uplift you get when paying in is usually larger than the tax bill when it pays out. If you go above the £2880 limit you won't get the uplift, so an ISA works out better.

Anything you might need in the next 5 years is best kept in a cash ISA. Stocks and shares ISAs are for longer term investment.

I only have the equity from the FMH which I got as a settlement from my divorce and a small pension, about £40k, also from the divorce. I've had some of the equity in ISA, some in PBs and also some on deposit at 5.91%. I think I'll put the minimum into the SIPP and then split the balance between cash and S&S ISA. It is, after all, a good time to buy. 😬

I have a share in a family home which my other parent left me, which is where I am planning on retiring to.

Thank you for your help.