Commercial Property in Pensions Explained

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At Derby Hub our ethos is to share business excellence and our members' presentations are no exception. Each week, we ask one of our members to share knowledge and advice about their industry. Presentations must be useful and not sell to the room. This ensures members get the most out of their membership and gain a good insight to that member's world.

Last week's presentation was by: Karen Sheldon, owner of Derby based IFA Sheldon Financial Services.

Advantages and Disadvantages to putting commercial property in pensions;

Examples of advantages are....

  • The ability to buy a property from which the member can operate their business, without significant outlay to the company / individual(s)
  • The SIPP/SSAS can purchase a commercial property that the member(s) or their business actually already own (provided it is purchased at the market value);
  • There is no limit as to the number of properties that can be purchased through a pension scheme (providing funds are available);

Examples of disadvantages are....

  • The pension fund is locked in and is not readily accessible until minimum retirement age which is currently 55;
  • 25% of the fund can be taken as a tax free lump sum with the remainder being paid as taxable income;

Allowable property

In general...property or land wholly used for commercial purposes, examples include:

  • Offices
  • Retail units
  • Industrial units
  • Factories
  • Warehouses
  • Agricultural land
  • Other land used for commercial purposes (e.g. an equestrian centre or a campsite)

Not allowable

Residential property or property suitable for residential use

  • Houses / Flats / Apartments
  • Holiday Cottages / Villas
  • Ski Chalets
  • An office built in the garden of a residential property

Partially allowable

In limited circumstances a building that is predominantly commercial but has an element of “job related residential property” may be allowable.

  • A caretaker's flat that is part of a commercial site
  • A flat above a shop that is leased from the scheme with the shop
  • A hotel / pub / guest house with manager’s accommodation
  • A nursing home with staff accommodation

For more information call: 01332 200333.

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Date Added: 21 February 2012

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