Transferring Commercial Property To A Pension – Key Issues

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As a business owner there are a number of ways you can utilize your pension fund you may not have considered. In this post we discuss the advantages of transferring your commercial property to a pension.

If you would  like to make a pension contribution but are worried about the effect on your cash flow then transferring your commercial property (or land) may be a solution.  You can transfer your commercial property  into your pension scheme ‘in specie’ saving tax and without affecting your cash flow.

If your transfer into a SIPP or SSAS scheme you, not the pension provider, take control of the asset and decide how and where to invest. Transferring the asset ‘in specie’ means the transfer of ownership of an asset is made without the need to convert the asset to cash. As the property transfer is then effectively a pension contribution it is entitled to tax relief.

By transferring a commercial property to your SIPP (or SSAS) pension you will be transferring the legal ownership to the pension trustees who will hold it on trust for the duration of the pension scheme. The value of the property and associated income such as rent will be invested in your pension.

Commercial property transfer to a pension is a specialist area and there are, of course, several key issues to be aware of including:

  • The choice between a SIPP or SSAS scheme.
  • Capital gains tax may be payable if there is any increase in property value on disposal.
  • VAT and tax issues must be considered carefully.
  • Annual allowances that limit how much you can put into a pension and still enjoy all tax reliefs.
  • The current £1.25m LTA limit (£1m from April 2016) on the amount an individual can hold in a pension fund.
  • Ownership of the asset. Is it best to arrange joint (or multiple) ownership?
  • Beneficiary of the asset should one or more of the owners die.
  • Pension set up charges and ongoing administration costs.
  • The risk associated with Government changes to the rules on SIPP or SSAS pensions.

specialist buying property with your pension fund advice

Although there are real potential benefits in transferring commercial property to a pension there are also significant financial risks and you should always take independent advice. Call us on 0800 043 8341 to discuss your options. Alternatively, Email us at enquiries@thepensionreviewservice.com or complete the contact form below and we will call you. We are authorised and regulated by the FCA and operate UK wide.

The information in this article does not constitute financial or other professional advice.