Does your business own or rent commercial property? Or are you considering steps in this direction? If so, it is worth discussing the possibility of ownership via Self Invested Personal Pensions (SIPP) or Small Self-Administered Schemes (SSAS). The tax benefits can be significant!
A face to face meeting to discuss your own circumstances is the best way forward. We outline some of the features, benefits and potential pitfalls for consideration in SIPP or SSAS commercial property purchase. Perhaps the most important point to understand is that property held in a SIPP or SSAS is owned by the trustees. You may be one of the trustees, but decisions are therefore subject to the agreement of others! This can be particularly important in Group arrangements, where a number of business owners or family members pool their pension assets to make a purchase.
What are the benefits of purchasing commercial property with a SIPP or SSAS?
Although there are many potential advantages, these transactions should not be undertaken without careful consideration. Examples include:
- Certain types of property may be unsuitable for acquisition by the trustees, such as residential property or overseas property.
- Considerable due diligence is required to be undertaken, before the trustees will agree to acquire the property.
- The value of the property will fluctuate depending on market conditions. This will also be impacted by the availability and relative attractiveness of local properties.
- The property will need to be regularly revalued, which will be an additional cost to the pension scheme. This applies when Pension benefits are drawn/transferred, capped drawdown plans reviewed or there is a reallocation of shares of the property. On lease events involving connected parties, a rental valuation will need to be obtained. This includes granting a new lease, renewing or altering a lease and for periodic rent reviews.
How we can help
Hunter Gee Holroyd and HGH Wealth Management Ltd work in association with InvestAcc Pension Administration Limited, a specialist multi-award winning SIPP and SSAS provider. They work with authorised Financial Advisers throughout the UK. Their property team currently deals with 2,135 properties (as at 1st January 2020) and has considerable experience and expertise in dealing with many types of property transaction. We can help with types of acceptable property, funding considerations and the process which needs to be followed.
If you have an enquiry of this nature or indeed anything Pension, SIPP or SSAS related, please contact:
Nick Lawson – Wealth Management Director
- Mobile: 07808 627 983
- Email: firstname.lastname@example.org
HGH Wealth Management Ltd is an appointed representative of InvestAcc Ltd which is authorised and regulated by the Financial Conduct Authority. Company No. 3203520. Registered Office: Club Chambers Museum Street York YO1 7DN