Pension payments can be boosted with simple 'often overlooked' trick - but deadline is fast approaching

A Bed and self-invested personal pension (SIPP) works as a “wrapper” which allows Britons to save, invest and build up money for then they retire.

Then people can sell stocks and shares investments and rebuy them within their SIPP.

Personal finance editor at Interactive Investor, Alice Guy, told the Express: “Using a Bed and SIPP means that more of your investments will be protected from tax inside a pension wrapper.

“They can grow free of dividend income tax and capital gains tax.”

There are also great ways to take advantage from tax relief, which has become a hugely popular way to save.

If you contribute £80 towards your pension, the taxman then adds £20 – taking the total to £100.

Those with a higher tax rate are eligible to claim an extra 20 per cent in tax relief, with additional rate taxpayers able to claim an extra 25 per cent.

To claim this you must submit a tax return or write to HMRC.

This method can also be used for inheritance tax.

Inheritance tax is not applied to anything left to beneficiaries in a SIPP.

It’s worth noting that there are some important tax changes coming very soon.

Guy added: “You need to act now if you want to take advantage of the current tax allowances before they are reduced in April.

“For example, you could sell some shares, keeping your gains below the current CGT exemption of £12,300 and rebuy them within a SIPP or an ISA.

“The tax changes mean that even small investment portfolios could now attract a big tax bill in the future.

“For example, an investor with a portfolio of £50,000 held outside an ISA or SIPP and £2,000 dividend income would currently pay no dividend income tax, but would owe £38 dividend tax next year and £506 dividend tax the following tax year.”

By selling their investments, people may have to pay capital gains tax on their investments under a Bed or SIPP.

Tax liabilities such as income tax should also be considered when drawing a pension.

A SIPP may not be the best option if someone is hoping to access their investment wealth in the short term.

The normal minimum pension age - the point when pension cash can be accessed without a hefty charge - is 55.

But this is set to rise to 57 in 2028, and will gradually rise as the state pension age increases.

Nevertheless, Britons should always realize that their capital is at risk when they invest. There is a possibility that people could receive less than they originally invested.

Investment may also not be suitable, so it is important to seek professional financial advice before making any decision.