Commercial building in a SIPP

evergreen

We have a small business unit which is part of business. We may sell the unit or would it be better to set up a private SIPP and sell the unit to the pension plan. What would be the tax benefits and what happens when we want to draw a pension. Would be grateful for any advice from anyone who knows about these things.

Murdina

There are loads of issues here and you will have no choice but to take professional advice and use professional advisers if you set up a SIPP.

Holding your own business premises through a SIPP is very common. However, how you get them in there would depend on their present value, how much you can put into the SIPP ( in terms of tax allowances) and so on. You might also find you were investing your pension entirely in one asset i.e. commercial property, whereas standard advice would be to spread the risk and balance property with equities and may fixed interest securities.

When you come to draw a pension., you may need to realise the investment - although this would then be tax free.

You could just sell the unit and put the funds into a SIPP which might give you more flexibility about investing. But that would have CGT implications.

I think your pension should be driven by the best possible investment performance, and personally I would be nervous if this will be your only asset.