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Self Invested Personal Pension (SIPP)

Buying Commercial Property Through a SIPP

It is very common for a pension scheme such as a SIPP (Self Invested Personal Pension) or a SSAS (Small Self-Administered Scheme) to hold commercial property as part of the overall pension portfolio for both diversity and potential tax benefits.

In general, only property or land that is wholly used for commercial purposes can be held as an asset of a pension scheme, such as office space, retail and industrial units, pubs, care homes, hotels and agricultural land.  Residential property cannot be owned in a pension.


You can borrow up to 50% of the net fund value of the pension scheme for the purpose of buying commercial property and the lender will usually require first legal charge over the property to be purchased. 

Tax Benefits of a SIPP

There are a number of tax benefits of owning a commercial property in a pension scheme including:

  • Tax relief on personal or company contributions into the pension scheme (subject to limits)
  • Rental income received in the pension scheme is free from Income Tax
  • There is no Capital Gains Tax payable on the sale of the property whilst it remains an asset of the scheme
  • Your pension does not form part of your estate so the property and other assets within the scheme may be free from Inheritance Tax


Choosing the right route for you - how does each route compare?


Purchase commercial property through SIPP

Rent commercial property only

Buy commercial property outright

No income tax on rent received

Tax on rental income

No rental income payable

Releases capital back into the business to help with cashflow through rent

Rental income to third party – extra expense for

Capital required for purchase reduces cashflow

Must pay market rent to the SIPP             

Rent can be negotiated


The SIPP can borrow up to 50% of its value to acquire the commercial property


Lending subject to personal requirements

Eventual sale of property free of capital gains tax


Eventual sale of property subject to capital gains tax

Ownership of property outside estate for Inheritance Tax purposes – potential for 40% tax saving on death


Ownership of property within estate for Inheritance Tax purposes – potential for 40% tax on death

Protection from credits in event of personal or business bankruptcy

No future certainty of tenancy if lease expires

No protection from creditors

Cannot be used as collateral for loans to the firm


Can be used as collateral for loans to the firm

Costs associated tend to be higher and ongoing valuations required


Ongoing costs limited


Where can I get advice about my pension and buying commercial property through a SIPP?

You can get advice about your pension arrangements by speaking to our expert team of financial advisers who are specialists in this area and authorised and regulated by the Financial Conduct Authority (FCA).

Please be aware that your investment may fall as well as rise and you may not get back what you put in.

Please contact us on 01246 560 570 for a no obligation initial consultation.


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It is now just about 18 months since you took over as financial adviser to both myself and my wife. At our fist meeting I was very impressed at what you told me you could do and what returns might be achieved. I was particularly keen to hear not only how you would manage my funds but also that you would ensure our capital gains tax allowance would be utilised each year.

I thought if you achieved all you said you could you would be doing really well!

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Very well done. Keep it up.

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I have now been engaged with Jill and her team for just on 3 years,. Jill and her team have provided me with positive sound boarding in relation to personal wealth planning, aiding me make use of ‘all opportunities’ to plan for my future and that of my family….. becoming a friend in the process also.

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Frequently Asked Questions

Can I switch my investments over to Banner Jones if I’m not happy with my current adviser?

Yes, after an initial meeting we will be able to assess how we can help you, and outline what, if any charges we would need to levy to look after your financial planning needs.  We would then help you to transfer over your plans.

How often do you check and review my investments?

This depends on how you wish to engage us.  Most of our clients wish to benefit an annual review, where others wish us to establish the transaction, and then come back to us when/if they choose they need further assistance.  This will be discussed at the initial discovery meeting and confirmed in the client engagement letter and the suitability report.

I am due to retire next year and don’t have a financial plan in place, is it too late?

It is never too late – make an appointment we would be delighted to help you.

If I invest all of my funds I am able to access them should I ever need to?

This depends on the type of investment you put the money into – it is important to set aside a level of emergency fund, say 3 to 6 month income on deposit, and then consider a manner to vest additional monies which take account of your financial needs.  Part of the initial fact finding processes are to assess which styles of invests are appropriate to your needs.

I have a few different pension plans, I’ve heard they can be combined, is that right?

In some circumstances that maybe the correct option, but before a decision is made a full review would need to be undertaken.  This review would amongst other things look at the type of pension it is, you’re financial planning objectives, the death benefit requirements, charges and your attitude to risk/ability for loss.  Only when this review had been undertaken would any recommendations be made to you in writing.

I’m going through a divorce and am worried about my pension, is this something you can help with?

Yes, we are able to offer you support and advice, and provide backing to your solicitor on you gaining the right outcome.  There are several option available to you, and all these will be explained.  It is important to not only consider what is relevant today, but also into your retirement.  Just a thought, don’t forget your State Pension when looking at this aspect, you can get a forecast here

I’m not sure how I feel about risk, can you help me decide?

This is one of the most important aspects of financial planning.   We will assist you in determining your appropriate attitude to risk, and as important your ability for loss.  For example you may wish to have a higher risk tolerance for regular contributions to take account of ‘pound cost averaging’, and/or phase lump sums out of higher risk funds coming up to retirement.

I own a business; can you look after my business investments as well as my personal ones?

We provide a generic advice service, with most of our clients asking us to look after all their financial affairs.  This means that we can oversee all aspects of the planning.

I’ve accumulated various investments and pensions over the years. How can I be sure they are all tax efficient?

There are many taxes, for example income tax, capital gains tac, corporation tax, inheritance tax etc.  Investment tax wrappers work in different ways, and it is important to establish a linked up investment structures which work together to establish the outcome you need from your financial plan.  We will review these for you, and at the same time make sure that the charges are the most competitive you can access and that the funds you are investing into are appropriate to your attitude to risk and ability for loss.

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