commercial property 53
Commercial property and SIPPS for business owners
There have been major changes to pensions legislation in the past few years, making SIPPs (Self Invested Personal Pensions) extremely effective for business owners in particular, writes Neil Henke, financial adviser, of Beaufort Asset Management
Aside from the more obvious tax reliefs there are many other advantages of holding a commercial property in a SIPP.
Income tax relief can be obtained against the value of the property, the property can grow without capital gains tax, there’s no income tax on the rent paid, 25% of the fund will be available tax free on retirement and the property will be IHT free should you die before reaching retirement.
Some of the other advantages are detailed below:
Cashflow creation within a business
If you or your company own a commercial property and have a pension fund with any money already in it, you can release up to 150% of the value of the pension fund by buying the commercial property.
Cost-effective borrowing
It is usually possible to borrow up to 50% of the value of the pension. There is no tax payable on the interest payments which means it is repaid quicker.
Partial/joint property purchases
It is possible to purchase part of the property or to part own it with fellow business owners/directors and their pension funds on a proportional basis.
Extra security in difficult times
Unfortunately most businesses experience problems at times. Putting a commercial property into a pension will (in almost all cases) protect it from the company going into liquidation or personal bankruptcy.
Maximising the tax efficient use of pensions for retirement
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It is possible to pay up to £500,000 into a pension, using unused reliefs
THE BUSINESS MAGAZINE – THAMES VALLEY – OCTOBER 2013 06/08/2013 16:01:13 half page
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and alternate funding calculations, but your business may not have the cash to do this. Making a contribution of part or all of a commercial property, may be a really good way to use up the available reliefs.
Exit planning
Moving a property into your pension means the new buyers, should you sell the business, have to come up with less cash for the business and you retain an income into your pension. It is also possible for younger directors to buy the property with their pension which can be of a real benefit in succession planning.
These are the basics of why you might consider putting a commercial property into a pension as a business owner. The most suitable course of action will be based on your own objectives and circumstances and something on which independent advice should be sought.
Details: Neil Henke 0118-9879400
nhenke@beaufortasset.com www.beaufortgroup.com
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