Investing in commercial property through your pension

2nd January 2024

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RDG Accounting in Derby have teamed up with Premal Prajapati from Elevation Corporate Pensions to advise our clients how to make the most of their money.

 A basic transaction that helps organisations to grow has been happening in savvy businesses since the 70s, but there are many who still have no clue that it exists

Buying the building you’re currently renting is one sure-fire way to grow your business and earn from it for the rest of your life. This is according to Premal Prajapati who heads up Elevation Corporate Pensions.

“We want business owners to realise there’s a pension vehicle out there that goes hand in hand with growing their business,” Premal explained. “The SSAS pension scheme, which came out in the 70s, allows you to buy commercial property in a tax efficient way which benefits both the company and its directors pension planning, resulting in substantial tax savings.”

It’s the original self-investment pension scheme and stands for Small Self-Administered Scheme. SSAS pensions allow a business to invest in commercial property which they operate from. Not only is rent payable but once you retire or if the business is sold the rental income can continue from your successor free of tax. And, if the property is later sold, any capital gains won’t be taxed either.

“SSAS is sheltered from all those taxes,” Premal added. “Businesses are now looking at a sunnier picture since the pandemic. But what does that look like in your late 50s? Everyone thinks their business will last forever in their 30s or 40s but if you want to step back from it in later life, the SSAS is a way to make sure your business continues to generate income for you in retirement.”

“Supporting clients personally to understand how pension schemes can work for them, we’re able to attend client meetings alongside other trusted advisers to ensure all the angles are cover and the best possible solutions is delivered”. Every successful business should have three trusted parties involved: an accountant, a financial advisor, and a pension specialist.”

What is a SSAS pension?

They’re usually set up to allow no more than 12 members of senior staff to build up a sum of money. However, they can be opened up to other employee and family members too. Managed by a company’s directors, the employer and the members of the scheme pay pension contributions. Available to limited companies and partnerships in the UK, they’re used to gain more control over how pensions of the company’s directors are invested. They’re ideal for small and family businesses for succession planning, business continuity, and wealth protection.

Pros of buying property though a SSAS pension

  • You get to have control and oversight over your property
  • When selling the property, any capital gains won’t be taxed
  • Rent received through the property will be tax-free
  • Tax-relief is applied to company contributions.

Things to be aware of

  • Pension can only be accessed from age 55
  • All investments have the potential to decrease in value

If you would like to learn a bit more and find out if this is something you could benefit from then give Katrina a call and we can arrange a meeting with Premal and ourselves to discuss in more detail.

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