Investing in commercial property with a SSAS/SIPP pension

RWB image_Commercial property

 

Small Self-Administered Scheme Pensions (SSAS) and Self Invested Personal Pensions (SIPP) are two types of personal pension schemes. They are pensions that are controlled by you, and thus you make the investment decisions.

SSAS and SIPP pensions can be used for investing into commercial property or other business ventures that you are not directly involved in. 

These pensions will hold any investments they make together with the investment income received until you reach retirement age, when you can draw down on the balance. 

Types of commercial property investment for SSAS/SIPP pensions

SIPPs/SSASs can enable you to invest in the following commercial property:

  • Shops
  • Offices
  • Restaurants
  • Factories
  • Warehouses

Advantages of using SSAS/SIPP pensions

If you are a higher rate tax payer who is focused on capital growth and securing a safe and comfortable retirement, SSAS/SIPP pensions are worth considering. There are many advantages of investing in commercial property through a SSAS or SIPP:

  • All income generated within the pension (such as rent) will be free from tax
  • You control your investments and where your money goes, giving you added security and confidence in your investments
  • As with all pensions, all money invested into it will provide you with personal tax relief - which could be up to 40% 
  • If done correctly, it could provide you with a safe and lucrative retirement
  • The value of your pension can be passed to your children without incurring inheritance tax, by acting as a form of family trust
  • At age 55 (‘retirement age’) you can take up to a 25% lump sum of your total pension amount in one go (currently tax free)
  • Assets held within the pensions are free from the claims of personal creditors, thus ring-fencing your pension assets.


What to be aware of when considering SSAS/SIPP commercial property investments

  • You cannot access the pension until you reach the age of 55
  • These pensions usually carry higher charges than other personal pensions, such as increased set up and transaction costs and ongoing monthly running costs. However these may be outweighed by the tax saving benefits
  • Only commercial property can be invested in using this method, not residential or commercial to residential conversions
  • If you are looking to move over existing commercial property from a Limited Company into your pension then you may incur Stamp Duty Land Tax (SDLT) and Corporate Gains Tax (CGT). However, other tax breaks and tax relief benefits you get may compensate for this


Want to find out more?

Want to find out more about the potential tax benefits of investing in commercial property through SSAS/SIPP pensions? Email us, visit our property accounting and tax team page or call 0115 964 8888 for more details.

 

The views provided in this article are for general information purposes only. Nothing in this article represents advice of any nature whatsoever. Accordingly, RWB CA Limited does not accept any liability or responsibility for the information contained in this article or any decision or other action that may be taken in reliance upon the information contained within it. RWB CA Limited accepts no responsibility for any errors of fact or opinion and assumes no obligation to provide you with any changes to its assumptions.  

Tags: Property advice Investing in commercial property SSAS Pension SIPP Pension Property tax

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