What are the benefits of a SIPP or a SSAS?:-
- Any capital growth in property value is free from CGT (Capital Gains Tax)
- You get Tax relief at the individual or company's highest rate
- The rental income received by a pension scheme attracts no UK income tax
- On retirement 25% of the pension fund can be paid as a tax free lump sum
- On death before retirement the whole payment under the pension fund could be paid as a tax free lump sum (so for example no inheritance tax)
So having established that it is a good idea which one should you choose?
SIPP and SSAS – what is the difference?
A SIPP - this is a Self Invested Personal Pension
- This is a personal pension set up by an insurance company or specialist SIPP operator
- It is available to everyone
- There is usually a minimum fund size
- There are usually higher running costs
A SSAS - Small Self Administered Scheme
- This is a small occupational pension scheme set up by the directors
- Members are usually employees or directors of the employer
- Each member has a notional share of the SSAS funds
- More flexible on investment
- Can lend to the company
How Fidler & Pepper can help?
You need to work directly with your financial advisor to fully understand the pension scheme rules and to get this properly set up and in place. Once you have the SIPP or SSAS set up we become involved to transfer the commercial property into the pension scheme and where required draft the lease for the tenant. We expect our part of the process to take around 12-16 weeks to complete.
Your first steps
Speak to your financial advisor to discuss your options and then call one of our specialist team for legal advice and support. Christie Limb is one of our commercial partners who can be contacted on firstname.lastname@example.org or 01623 663 244.
* Example of saving £80,000
This could apply if:-
- You have a property that has gained £100K over the 15 years since you bought it. Capital Gains Tax liability on that at current rates would be £21,713.50.
- You are a higher rate tax payer paying £10K a year into the scheme - giving tax relief of £4K a year. Over 15 years that's £60K in tax saved at current rates