Benefits of holding property through a SIPP or SSAS

27th February 2024

Recently we have seen a large increase in clients enquiring as to whether to hold commercial property within a SIPP or SSAS vehicle as part of a pension strategy. Clients are also asking us for advice and support regarding refinancing properties held by a SIPP or SASS.

To assist clients who may be thinking about this route, our colleagues Pardeep Khela (Real Estate) and John Feaster (Tax) have put together a helpful guide.

What is a property SIPP?

A self-invested personal pension (SIPP) is an investment-related pension scheme whereby a client can invest in commercial property and enjoy certain tax benefits of a pension.  The SIPP will hold the property until retirement.  Often the types of properties held by an SIPP include offices, shops, factory units, hotels and care homes.

A substantial benefit is that the property is held in a tax-free wrapper i.e. no income tax is payable on any income received by the SIPP and there is no capital gains tax on a property sale.

A SIPP scheme can also borrow up to 50% of the net fund value of the SIPP for the purpose of buying a commercial property within the SIPP.

What is a property SSAS?

A small self-administered scheme pension trust (SSAS) is regulated by HM Revenue & Customs and The Pensions Regulator.  It can have up to 11 members who must be other employees and/or family members.

Again, an SSAS can be used as a vehicle to facilitate investment into property.  A property SSAS works as a tax-efficient wrapper used to fund and grow a property investment portfolio and continue to provide a fund for the retirement and family wealth of the member.

In summary

Both SIPP and SSAS schemes need careful consideration and the providers tend to be very strict regarding property requirements. Often the provider requires asbestos surveys, full tax records and fire risk assessments for any property held. In addition, many banks struggle to accommodate the bespoke requirements of SIPP and SSAS schemes, which often require support from our banking team.

We’re here to help

If you have any questions regarding holding property through a SIPP or SSAS scheme, then please do not hesitate to contact either Pardeep or John to discuss how we can assist you:

We’re here for you – contact us today

0300 124 0406

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