Directors Pension Planning

Buy a Property with Your SIPP/SSAS*

Over the past decade the SIPP industry has been swamped with applications from individuals who wanted to take control of their pension. However, recently, a number of SIPP investors have voiced their objection to the practises and decisions of the life company. We can help to get the right pension arrangement to achieve your goals.

This means buying your company property with your pension, for a low hassle and in a high value manner that means you remain in full control of your and your business assets without creating problems for yourself later on down the line.

*SIPP stands for Self-Invested Personal Pension and SSAS stands for Small Self-Administered Scheme.

What’s the Difference Between an SSAS and an SIPP?

There is, technically, quite a large difference between a SSAS and a SIPP in the eyes of the law and in practise, so it pays to take some expert independent financial advice in order to ensure that you get the right product for you.

In the Eyes of the Law?

With both you can borrow within the contract up to 50% of the net value of the plan. With an SSAS there is the opportunity for the pension to lend money (with the same limit) to the sponsoring employer.

With an SSAS, it is always the case that the owner of the pension is a trustee within the arrangement and can therefore decide what makes a suitable purchase for the pension. However, this comes with the responsibility to ensure that all your investment decisions are sound; which is where a professional IFA can really help out with your obligations to take professional advice as stated in the Trustee Act 2000.

In Practise?

An SSAS is an occupational scheme that is so small that they are not regulated by The Pensions Regulator – which is more onerous than the VAT reporting system. This means that the trustees, as long as they agree, can make any decision that they feel is necessary.

This isn’t necessarily a good thing, many investors getting into property purchase through their pensions actually prefer not having responsibility for their funds and would rather the life company take that from them.

Other Benefits

Both arrangements are, by far, the best method to purchase commercial property. A company and/or an individual may deduct the interest from their taxable income on a property and must pay income tax on the rent.

Within either of these arrangements the pension has no need to pay income tax or capital gains tax – so purchasing a property through one of these arrangements can save thousands of pounds of tax money.

This article is just a brief summary of the issues and there are much more complex considerations when choosing which type of pension to purchase. You would be best served by calling us soon to discuss your options and get a real expert in your corner.