I asked ChatGPT whether an ISA or SIPP was the best place to invest £10k this year and he said…
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Since i FTSE 100 is growing, investors will be wondering whether they should benefit from investing in a Self-Invested Pension (SIPP) or a Stocks and Dividends ISA.
We Britons are lucky. Both are tax-free ways to access the power of investing in the stock market, but they offer slightly different benefits. So which is better?
It’s a tricky question, so I decided to call on the artificial intelligence (AI), asking ChatGPT if a SIPP or ISA could make £10k work harder by 2026.
Two duty free wrappers
The chatbot said SIPP withdrawals are instant. Donations benefit from substantial tax relief, so a taxpayer with a basic rate of 20% only needs to invest £8,000 to end up with £10,000 in their pot. Higher rate taxpayers can claim an extra £2k back on their tax return. Even better, 25% can be taken as tax-free cash.
As always, there are trade-offs. Additional SIPP withdrawals are taxed as income, and investors cannot access their money at all until they reach the age of 55 (rising to 57 from 2028).
Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice. Students are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.
Stocks and Dividends ISA investments do not have that advance, but they are flexible. Withdrawals can be made at any age, and are always tax-free. Both wrappers shelter shares and capital gains, allowing returns to be quietly compounded over time. Would combining the two be the smartest strategy?
ISAs are flexible
ChatGPT has the mechanics well laid out but ultimately it’s a personal choice. Personally, I think these tax breaks are a good match, and I will look to spread the money between the two. That way investors get an initial tax break from a SIPP, but can reduce their tax liability in retirement by withdrawing some money from an ISA.
For anyone investing £10k in 2026, you may need to split the contributions into both vehicles, or top up the smaller one.
The next big question is which stocks should you buy? Here, I will never ask ChatGPT to help me with that. It’s not a stock-picking program, and it tends to make simple but costly mistakes.
Workshop Group games are challenging
Investors looking for growth might consider the Warhammer-maker Games Workshop Group (LSE: GAW). A small-scale wargame manufacturer struggled to enter the FTSE 100 after a decade of incredible gains. In the past year, the shares have risen almost 40%, while in two years they have risen 95%.
There is also income. Games Workshop announced a 50p dividend on 17 December, taking total payouts for 2025/2026 to 375p per share, up from 265p 12 months ago.
It’s a bullish stock, but a word of warning: it’s not cheap. The price-to-earnings ratio now sits at 33.7, above the FTSE 100 average of 17. Growth can be difficult if profits are disappointing or mood swings.
Games Workshop has a huge growth opportunity with the upcoming release of Warhammer Amazon. If that wins over an audience, Games Workshop can go up, but if diehard fans hate it, there could be a backlash. No stock is risk free.
Momentum stocks like Games Workshop may be exciting, but investors need to balance holdings from other sectors, including equities, and invest for the long term, not just 12 months. That applies whether they hold them in an ISA, SIPP, or both.
