Is the stock market correction a once-in-a-decade chance to target a million-pound SIPP?

The SIPP tax-wrapper rarely grabs the headlines. But given that today is 6 April, the first day of the new tax year, I thought it was a good time to highlight its attractions. Most investors will be thinking of their shiny new Stocks and Shares ISA contribution limit, but SIPP tax breaks complement it very nicely. Is it time to shift focus?

A super pension boost

ISA contributions come from taxed income, but all growth and income is free from HMRC’s attentions. SIPPs work differently. Contributions attract upfront tax relief, giving an immediate uplift, but after taking the 25% tax-free lump sum, further withdrawals may be taxable.

That tax relief is tempting. Investors can tuck away up to £60,000 a year, depending on their income, and contributions are instantly boosted with 20% basic rate tax relief, lifting that to £72,000. Higher rate taxpayers can claim a further 20% or 25% via their tax return.

Unused allowances from the previous three years can be carried forward. In theory, that means up to £240,000 could be invested in one go, with tax relief on top.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Few will have that kind of spare cash. But steadily building a SIPP year after year, alongside an ISA to balance the tax treatment, can still produce retirement-changing results.

Building a serious pot

Let’s say somebody invests £750 a month, which adds up to £9,000 a year, for 30 years. If their pot grows at an average compound rate of 8% a year, they’d end up with £1.1m. Remember, that £750 monthly contribution effectively costs a higher-rate taxpayer just £450, after tax relief.

Reaching seven figures demands discipline, patience and the willingness to ride out market volatility. I’d aim to build that wealth via a balanced portfolio of mostly FTSE 100 shares.

One name that stands out to me is NatWest Group (LSE: NWG). Its enjoyed a strong run, up 25% over the past year and an impressive 170% over five. That’s a dramatic turnaround for a bank almost crushed by the financial crisis.

NatWest is back in full private ownership, and chief executive Paul Thwaite is focused on sharpening its core UK banking operations, improving digital services and keeping a tight grip on costs. Higher interest rates have lifted net interest margins and profits across the sector. In 2025, NatWest’s pre-tax profits climbed 24.4% to £7.7bn.

A great income stock

Many expected rate cuts to squeeze those margins this year. Now the Iran war and potential energy shock looks set to drive inflation and interest rates back up. That may support profitability, but could curb borrowing and drive up loan impairments. We could see fresh calls for a bigger windfall tax on the banks.

Even so, much of this looks reflected in the low valuation. The shares trade on a price-to-earnings ratio of under 8.5, and the trailing yield sits at a thumping 5.65%. Investors might consider buying with a long-term view. Further volatility in the days ahead may offer an even better entry point.

Not everyone will build a £1m retirement fund, but it’s an exciting number to aim for. And I can see plenty more cheap, high-yielding FTSE 100 stocks worth considering right now.

The post Is the stock market correction a once-in-a-decade chance to target a million-pound SIPP? appeared first on The Motley Fool UK.

More reading

• Check out today’s eye-popping Barclays, Lloyds and NatWest share price and dividend forecasts 
• Investors are rushing to buy these before the Stocks and Shares ISA deadline. Should we join in?
• Lists of income stocks to buy almost never include this one — but with a forecast 8.2% yield, I think they should!
• Investors may soon have a once-in-a-decade opportunity to buy cheap NatWest and Lloyds shares
• £10k invested in the FTSE 100 via an ISA on 7 April is currently worth…

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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