Investors racing to beat the annual Stocks and Shares ISA deadline on 5 April are in danger of overlooking an equally brilliant tax-efficient wrapper called the SIPP. Short for Self-Invested Personal Pension, this comes with generous tax breaks too. Is it the better option for new contributions?
I have my own views, but decided to see what artificial intelligence had to say. I’m wary of ChatGPT, but thought it might help me sift through the technical pros and cons of the two options.
I love my Self-Invested Personal Pension
ChatGPT started by praising ISAs as simple to understand. “Money grows free from income tax and capital gains tax, and all withdrawals are tax-free,” it said. Flexibility is a big plus. Investors can take funds out whenever needed.
However, it said that a SIPP offers an upfront benefit, as investors get tax relief on the way in. A basic-rate contributor putting in £80 sees it boosted to £100. A higher-rate 40% taxpayer can claim a further £20 back through their tax return. That extra money compounds and grows over time.
Please note that tax treatment depends on individual circumstances and may change in future. This article is for information only and does not constitute tax advice. Investors should carry out their own due diligence and seek professional guidance before making decisions.
The catch is that SIPP savings are locked away until at least 55, rising to 57 from 2028. Withdrawals are taxable, so they’re less flexible than ISAs. ChatGPT noted this, but was reluctant to name an absolute winner. Fair enough. It does depend on the investor.
My own view is that ISAs and SIPPs work best together. That way investors can combine tax relief on the way in, with tax breaks on the way out. Someone with a large ISA but modest pension might channel new funds to a SIPP, while those with a decent pension but smaller ISA could tilt contributions the other way.
The fun bit is picking shares to go inside these wrappers. And that’s where AI struggles. As ChatGPT admits, AI can summarise facts, but it can’t think critically, judge market sentiment or anticipate company performance. That part is up to human investors.
British American Tobacco offers income and growth
FTSE 100-listed British American Tobacco (LSE: BATS) has a fabulous track record. Cigarette stocks aren’t for everyone and personally, I don’t buy them. But I often wish I did. The British American Tobacco share price has climbed 86% over two years and 38% in the last year, with dividends on top.
The business has maintained market share and pricing power despite fewer people smoking. In 2025, it sold 465bn cigarette ‘sticks’ globally and 12bn other tobacco products. Preliminary full-year results, published on 12 February, were solid but not spectacular. They showed revenue down 1% to £25.6bn, but up 2.1% at constant currency rates.
Its new categories division grew 7% to £3.62bn and its profit contribution jumped 77% to £442m. The board also hiked the dividend by 2% and announced a £1.3bn share buyback for 2026.
Along with many other FTSE 100 stocks, British American shares fell in the last turbulent week, by 7.7%. As a result, the price-to-earnings ratio has eased to 12.4, while the trailing dividend yield edged up to 5.6%.
British American Tobacco seems worth considering with a long-term view. And there are plenty of other FTSE 100 stocks that I’m willing to buy in the current volatility. I’ll pop some in an ISA, to beat that deadline. After that, I’ll top up my SIPP.
