A major attraction of SIPPs and SSASs is that they can invest in commercial property which is let to the member’s company or partnership. You can even sell a property that you or your business owns to the pension scheme (although this might result in a tax charge on any capital gains). Any sale transaction must use an arms’ length valuation, because there are tax penalties for ‘value shifting’. Similarly, the business must always pay a full commercial rent, which the SIPP or SSAS will receive tax-free.
A SIPP or SSAS can borrow up to 50% of its net assets for property investment (or any other purpose) so, for example, a SIPP with net assets of £300,000 could borrow £150,000 and spend £450,000 on a commercial property. Often SIPP and SSAS property purchase is financed by a combination of transfers from previous pension arrangements, new contributions and borrowing.
SIPPs and SSASs that hold commercial property as an investment will normally have higher annual charges than simpler pension arrangements with investments in listed securities, collective funds and cash.Last Updated
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Self-invested personal pensions and small self-administered schemes
06: Commercial property investment
The FSA does not regulate tax advice. Tax rules are subject to change.
