What’s the UK Equivalent of a Roth IRA?
Thomas Drury
Co-Founder
Thomas is an experienced financial trader in leverage instruments, crypto and general investing. He has over a decade experience in finance and holds Chartered Status in the financial industry, Thomas’s speciality is trading CFDs, Forex and Day Trading. His crypto portfolio is heavily weighted towards BTC and Eth, but enjoys trading low cap crypto’s with higher volatility. Thomas’s favourite trading strategy is break out Trading.
“Our commitment at The Investors Centre is unwavering. We strive to provide clear, actionable advice that empowers you to achieve financial success. Our vision is a future where anyone can invest confidently and wisely.”
Dom Farnell
Co-Founder
Dom is an experienced retail investor, learning his craft in what he likes to call the “hard way”. Through many of these lesson’s he has crafted himself a sound investment strategy that has enabled him to make investing into a business not just a hobby. He wanted to create The Investors Centre to be able to use these lessons and help other people establish them selves in the world of investing.
“Financial clarity and integrity are the cornerstones of everything we do. We’re here to ensure that your investment journey is built on a solid financial understanding and a sound strategic foundation.”
Table of Contents
Disclaimer
How We Test
Many UK investors look for something like America’s Roth IRA, known for tax-free growth and withdrawals in retirement. While there’s no identical account here, the UK offers Stocks and Shares ISAs and SIPPs, which together can deliver similar tax advantages tailored to UK tax rules.
Quick Answer: What is the equivalent of a Roth IRA in the UK?
There’s no exact UK version of a Roth IRA. However, the Stocks and Shares ISA comes closest, offering tax-free investment growth and withdrawals. A SIPP, meanwhile, provides upfront tax relief. Many UK savers combine both to achieve benefits similar to an American Roth IRA.
Why isn’t there a Roth IRA in the UK?
Roth IRAs exist under US tax law to encourage American retirement saving. The UK has a completely different tax system, offering ISAs and pensions tailored to British taxpayers. That’s why there’s no Roth IRA here—just local accounts with similar tax advantages.
What’s the closest UK equivalent to a Roth IRA?
The closest UK alternative to a Roth IRA is a Stocks and Shares ISA, which uses after-tax money, grows tax-free, and withdrawals stay tax-free. A SIPP gives upfront tax relief but taxes withdrawals. Many UK investors combine both to replicate Roth benefits.
How does a Stocks and Shares ISA work?
A Stocks and Shares ISA lets you invest after-tax money into shares, funds, and bonds. Your investments grow free from UK income or capital gains tax. Withdrawals are also tax-free, making it a flexible, long-term way to build wealth without future tax worries.
What can you invest in?
Inside a Stocks and Shares ISA, you can hold individual stocks, ETFs, mutual funds, investment trusts, and bonds. All dividends, interest, and capital gains earned are shielded from UK tax, allowing your investments to compound more effectively over time without annual tax bills.
How much can you put in each year?
For 2025/26, you can contribute up to £20,000 across all your ISAs combined. This allowance resets every April. Unlike pensions, there’s no employer input or lifetime limit, letting you steadily build substantial tax-free investments year after year, regardless of your total income.
When and how can you take money out?
You can withdraw from a Stocks and Shares ISA anytime, completely tax-free. There are no penalties, no minimum age restrictions, and funds usually settle in a few working days, offering far more flexibility than pensions or US retirement accounts tied to retirement age.
Who can open one?
Any UK resident aged 18 or over can open a Stocks and Shares ISA. There’s no income cap, so both high and low earners can take full advantage of the £20,000 annual allowance to grow investments sheltered from UK income and capital gains tax.
Could a SIPP be a better Roth IRA alternative?
A SIPP offers upfront tax relief on contributions, tax-free investment growth, and withdrawals taxed later. It’s more like a traditional US IRA but remains a powerful retirement tool. Many UK investors combine SIPPs with ISAs to balance immediate tax breaks and long-term tax-free access.
How does SIPP tax relief work?
When you pay into a SIPP, the government adds 20% basic-rate tax relief automatically. Higher-rate taxpayers can claim more through their tax return. This means a £100 investment only costs £80 upfront, giving your retirement savings an instant boost and reducing your current tax bill.
What can you invest in through a SIPP?
SIPPs give access to a wide range of investments: individual stocks, ETFs, mutual funds, bonds, and REITs. Like ISAs, all growth and income inside the SIPP are sheltered from UK tax, maximising compounding until you eventually withdraw funds in retirement.
When can you withdraw?
You can start taking money from a SIPP at age 55 (rising to 57 by 2028). The first 25% you take out is usually tax-free, while the remaining 75% is taxed as income, offering both a tax-efficient lump sum and future retirement income.
How do ISAs, SIPPs, and Roth IRAs compare?
ISAs, SIPPs, and Roth IRAs all grow investments tax-free, but differ on when tax is paid, how much you can contribute, and withdrawal rules. Understanding these differences helps you balance immediate tax perks, long-term growth, and flexible access to suit your personal goals.
When are taxes paid?
With ISAs and Roth IRAs, you invest after paying tax, then enjoy tax-free growth and withdrawals. SIPPs work differently: you get tax relief upfront, but withdrawals in retirement are taxed as income. This shifts your tax bill to later, possibly at a lower rate.
How do contribution limits differ?
ISAs allow up to £20,000 each tax year, with no income restrictions. SIPPs let you contribute up to your earnings (capped at £60,000), with added tax relief. Roth IRAs are stricter, limiting contributions to $7,000 and phasing out for higher earners under US tax rules.
Which is more flexible?
ISAs are by far the most flexible — you can access your money anytime, tax-free. SIPPs lock funds until at least age 55, making them purely for retirement. Roth IRAs also restrict early withdrawals, typically requiring you to wait until 59½ for tax-free access.
Which is more flexible?
| Feature | Stocks & Shares ISA | SIPP | Roth IRA (US) |
|---|---|---|---|
| Tax on contributions | Paid upfront, no relief | Tax relief now (reduces taxable income) | Paid upfront, no relief |
| Tax on growth | Tax-free | Tax-free | Tax-free |
| Tax on withdrawals | Tax-free anytime | 25% usually tax-free, rest taxed as income | Tax-free after 59½ and 5 years |
| Contribution limit | £20,000/year, no income cap | Up to earnings (£60,000 cap) plus relief | $7,000/year, phases out for high earners |
| Withdrawal rules | Anytime, no penalties | From age 55 (57 by 2028) | From 59½, with exceptions |
| Best for | Medium/long-term flexible investing | Focused retirement saving with tax breaks | Tax-free US retirement income |
Can UK residents open a Roth IRA or transfer one?
UK residents can’t open or directly transfer into a Roth IRA, as it’s a US-specific retirement account. However, existing Roth IRAs can usually be kept, with withdrawals often tax-free under the US-UK tax treaty. ISAs and SIPPs remain the UK’s main options.
Can I transfer a Roth IRA to an ISA or SIPP?
No — you can’t directly transfer a Roth IRA into a UK ISA or SIPP. Roth IRAs are governed by US tax law and stay under IRS rules. Instead, most expats keep their Roth intact in the US while using ISAs or SIPPs locally.
Which Stocks and Shares ISA Platform Is Best for UK Investors?
| Rank | Platform | Fees (est.) | Range of Investments | Best For | Key Features |
|---|---|---|---|---|---|
| 1 | XTB | Very Low | Stocks, ETFs, CFDs | Cost-focused investors | Tight spreads, advanced charting |
| 2 | eToro | Low | Stocks, ETFs, Crypto | Beginners, social trading fans | Copy portfolios, simple interface |
| 3 | Trading 212 | Zero direct share dealing | Stocks, ETFs, Pies | Fee-sensitive passive investors | Auto-invest, fractional shares |
| 4 | IG | Medium | Shares, funds, options | Experienced traders | Huge market access, professional tools |
| 5 | IBKR | Low to medium | Global markets, funds | Active global investors | Depth, algo support, robust research |
| 6 | Saxo | Higher | Wide global coverage | Large portfolios, professionals | Premium service, extensive tools |
If you’re looking to grow your investments tax-efficiently, check out our in depth guide to the best Stocks and Shares ISAs in the UK to find the top platforms for UK investors.
XTB – Best Overall Stocks and Shares ISA Platform
What Do Our Experts Say?
XTB is a leading online broker recognized for its user-friendly platform and extensive market access, making it a strong choice for investors managing Roth IRAs and Stocks and Shares ISAs. With commission-free trading on stocks and ETFs, along with advanced analytical tools and a rich library of educational content, XTB supports long-term, tax-efficient investing strategies for both new and seasoned traders looking to grow their portfolios with confidence.
Pros & Cons
- Competitive fees
- User-friendly platform
- Extensive market access
- Limited research tools compared to some competitors
- No access to mutual funds
-
What are the Fees?
-
How Easy is it to Use?
-
How to Get Started?
| Fee Type | Cost |
|---|---|
| Buy/Sell Shares | None |
| Platform Fee | None |
| Minimum Deposit | £0 |
| Interest on Cash | None |
XTB offers a clean, intuitive interface suitable for beginners and experienced investors. Its mobile and web platforms provide seamless navigation, real-time data, and efficient order execution.
- Sign up on XTB’s website and verify your identity.
- Deposit funds via bank transfer or card.
- Select investments from available stocks, ETFs, and other assets.
- Monitor and manage your portfolio using XTB’s trading tools.
73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Final thoughts on building a Roth-style strategy in the UK
While there’s no UK Roth IRA, combining a Stocks and Shares ISA for flexible, tax-free access with a SIPP for upfront tax relief can closely mirror Roth benefits. This balanced approach helps UK investors grow wealth efficiently, manage taxes, and secure long-term financial goals.
Top 5 ISA Platforms
1
XTB
73% of Retail CFD Accounts Lose Money
2
eToro
61% of retail CFD accounts lose money when trading CFD’s with this provider.
3
Trading 212
When investing, your capital is at risk
4
IG
68% of retail investor accounts lose money when trading spread bets and CFDs with this provider.
5
IBKR
62.5% of retail investor accounts lose money when trading CFDs with this provider.
FAQs
Can I transfer a Roth IRA to the UK?
No. You can’t directly transfer a Roth IRA into a UK ISA or pension. However, you can keep it in the US. Speak with a cross-border specialist to understand tax implications if you’re a US citizen living in the UK.
Are Roth IRA withdrawals taxed in the UK?
Usually not. Thanks to the US-UK tax treaty, Roth IRA withdrawals generally remain tax-free in the UK if they’re tax-free in the US. But personal circumstances vary, so it’s wise to confirm with a tax adviser experienced in expat rules.
How much can I put into ISAs each year?
For 2025/26, you can invest up to £20,000 across all your ISAs. There’s no income cap on eligibility, so high and low earners alike can use the full allowance to grow investments free from UK income or capital gains tax.
Is a SIPP still good if retiring abroad?
Often yes. You still receive tax relief on UK contributions, but withdrawals might be taxed by the country where you retire. It’s crucial to understand local tax laws and whether there’s a double-taxation agreement with the UK to avoid unexpected charges.
