Maximise your pension with commercial property.
For many business owners and investors, pensions are often associated with stocks and shares, however, holding a commercial property in a pension, typically through a SIPP (Self-Invested Personal Pension) or SSAS (Small Self-Administered Scheme) — is an often overlooked option that can be highly tax-efficient.
Some of the benefits include:
Tax efficient rental income
One of the biggest advantages is the tax treatment. Rental income received into the pension is generally free from income tax, allowing the full amount to be reinvested and grow your pension pot.
Capital gains tax benefits
If the property is sold, any increase in value is typically free from capital gains tax within the pension — making it one of the most tax-efficient structures for property investment.
Use your pension to buy your business premises
A worthwhile strategy for business owners is to have their pension purchase their trading premises. This creates a double benefit as rent is a deductible business expense and the pension receives that rent tax-free.
Potential for long-term growth
Commercial property can provide both stable income and capital growth. Pensions can also borrow part of the purchase price, which gives you the opportunity to purchase a higher-value commercial property than you could with just cash alone.
Estate planning advantages
Pensions are generally held outside of your estate for inheritance tax purposes, helping you pass on your estate more cost-effectively to beneficiaries.
Expert advice
While there are many financial benefits to holding your commercial property in a pension, there are also strict regulatory requirements, including ensuring that any rent paid (especially if it’s your own business) reflects true market value.
Additionally, all costs associated with the property, such as maintenance, insurance, and loan repayments, must be paid by the pension. Any transactions must be carried out on an arm’s length basis. This is where professional advice for a RICS Registered Valuer is essential to ensure compliance, protecting value and supporting informed decision-making.
Support
Our team are all experienced and qualified chartered surveyors who take the time to understand the decision you are facing and the context around it. By combining detailed local market knowledge with rigorous professional standards, we help clients manage risk, protect value, and make decisions.
If you would like support with a commercial property decision you are facing, please talk to us, 01905 676169 or email info@gjsdillon.co.uk and we will be happy to guide you.