Pension planning does receive a lot of bad press with charges perceived to be high and growth poor but in reality this should only apply to older style schemes that are not managed by professional advisers. We are seeing a number of flexible solutions available to business owners and particularly for those wanting the benefits of purchasing commercial property through their Pension.
A Self-Invested Personal Pension (SIPP) is the most tax efficient way to purchase a commercial property. There are no Capital Gains on sale of the property, no income tax on rents received and the SIPP can be structured in a way so there is no Inheritance Tax on death.
M Whiteley, Entrepreneur, London
For business owners this offers a way of buying their own trading premises and effectively paying the rent to themselves. You obtain tax relief on contributions received and rent paid by your business is a tax deductible business expense but when received by your Pension is non-taxable.
It doesn't have to be a standard commercial unit either; SIPP's can purchase any form of commercial property. It can also pay for any development and improvement works and be registered for VAT to claim the VAT costs back. Your business risk is also being reduced as a major tangible asset is ring fenced from creditors in the event of bankruptcy.
We can also help you with the Finance required to purchase the property. Your SIPP can borrow up to 50% of net scheme assets and this is a great way of leveraging your Pension fund and making it work for you. For example, a £500,000 SIPP could buy a commercial property for £750,000 (£250,000 of which would be a Commercial Mortgage).
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