A Self-Invested Personal Pension, or SIPP, is a brilliant and sometimes underrated way to invest in shares. Yet it’s not the only great tax wrapper we have. Brits can also put up to £20,000 a year in a Stocks and Shares ISA. So which one to choose?
It’s complex, and I wondered whether AI could shed any light. I narrowed my question down, by asking ChatGPT whether a SIPP or ISA works best for high-yielding UK shares potentially offering more income than growth.
Two top tax wrappers
I’d never use ChatGPT to pick stocks. It gets basic facts wrong and has no opinions of its own, just lifts them from the net. I thought it might help with a technical question like this though.
The chatbot began with the obvious point. Upfront tax relief on pension contributions means that a basic-rate taxpayer investing £16k in a SIPP gets an instant boost to £20k, while higher-rate taxpayers can reclaim another £4k through their tax return. That gives them a real head start. As they buy more shares, they’ll get more dividends too.
The trade-off is access and taxation later. Money in a personal pension is locked away until at least age 55, rising to 57 in 2028, and withdrawals beyond the 25% tax-free lump sum are taxed as income.
An ISA flips that equation, as ChatGPT puts it. “There’s no upfront relief, but dividends and gains are free of tax for life and can be taken whenever it’s needed. For investors living off dividends, that flexibility and tax efficiency has real appeal.”
LondonMetric shares yield 6%+
One high-yield FTSE 100 stock that intrigues me is real estate investment trust LondonMetric Property (LSE: LMP). A REIT owns income-producing property and must distribute at least 90% of its taxable profits as dividends.
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.
LondonMetric owns logistics hubs, healthcare sites, leisure assets, and convenience stores. The trailing yield is a nifty 6.13%. It’s raised shareholder payouts every year for the past decade. The last two increases were eye-catching at 7.37% in 2024 and 17.65% in 2025, lifting the final dividend to 12p per share. The 2026 interim dividend of 6.1p was covered 111% by earnings. Forecasts suggest the yield could climb to 6.42% by 2027.
The commercial property sector has struggled as the economy slows and higher interest rates push up borrowing costs. LondonMetric carries hefty net debt of £2.1bn against a market cap of £4.6bn. The shares are down 10% over five years, although they’ve risen 10% in the past 12 months.
Revenues are growing
In November, the group reported an impressive 14.6% rise in first-half net rental income to £221.2m. Growth has come partly through acquisitions. Recent deals include buying Urban Logistics REIT, nine Premier Inn hotels from Whitbread for £89m, and two warehouses let to Booker for £26.2m.
There are risks. The price-to-earnings ratio is 19.3. That isn’t a bargain-basement valuation. The UK economy remains bumpy, and until there’s a broader recovery the shares could idle. Plus there’s that debt. However, I think LondonMetric is one to consider for long-term income-focused investors.
Given the complementary tax benefits, I invest pretty evenly between a SIPP and ISA. I do like the idea of holding high-yielding stocks inside an ISA, as there’s zero tax on the income, but wouldn’t use ChatGPT to select them.
