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Why Buy Commercial Property Through a SIPP?

This blog explains the benefits and logic behind buying your commercial property through your Self-Invested Personal Pension (SIPP).  While of course the financial advice offered by Rawlinsons P.I.P. will vary depending on your individual circumstances, in general there are plenty of compelling reasons to buy commercial property through a SIPP.

Tax Relief

Let the Tax Man pay for part of your property. Pension contributions can qualify for tax relief. Depending on whether it is you, or your company, making the contribution, you may qualify either for personal tax relief or – as pension contributions can be treated as an expense when calculating profits, relief against Corporation Tax. The system of tax relief is one of the reasons pensions remain popular. For a business owner buying business premises, the taxman could contribute significantly to the cost.

Rent is Dead Money

Many businesses prefer to benefit by buying their business premises than to pay expensive rents or leases. If your pension owns your business premises you will still be a tenant, but your pension will be your landlord, so it is your pension, not a third-party landlord, which will receive your rent – tax free. What’s more, it can potentially be treated as a business expense, reducing your Corporation Tax bill, subject to appropriate leases being in place.

No Tax on Asset Growth

Owning the property through your pension means that no tax is payable if you ever sell it, unlike holding the property outside of a pension which is subject to Capital Gains Tax or Corporation Tax

Take Control of your Premises

Owning your premises gives you far more control. While rent still needs to be paid on time and borrowing commitments met, no landlord can ever decide to sell up from under you, or arbitrarily and unfairly put up your rent.

Let your Pension do the Borrowing

Simply put, your pension can borrow up to 50% of its net value to help fund the purchase of a property. A pension can borrow from a bank, much in the same way your business would do.

A Cash Injection

If your business already owns your premises, arranging for your pension to buy it could give your business a valuable cash injection. On completion of the transaction, cash, previously held in your pension, would now sit in your business and the property would be owned by your pension. Subject to commercial price and transaction costs.

Lower Taxes when you Die

If you own your business premises personally outside a pension it will be included in your estate when calculating any Inheritance Tax due on your death. However, assets held in a pension are outside of your estate for IHT purposes. There are other tax advantages too, which depend on when you die, but which are worth exploring with your Financial Adviser.

Even if you don’t have enough money in your pension to buy commercial property through a SIPP outright, there are several options to help bridge the gap, and the experts at Rawlinsons P.I.P. will be pleased to advise you. For more details, call our team on 01733 568321.


Rawlinsons P.I.P. Limited is an appointed representative of David Booler & Co which is authorised and regulated by the Financial Conduct Authority (FCA registered number 146287).