If you own your business premises, either personally or through your company, you may want to consider using your pension to buy it from yourself.
There are a couple of key ways that this can transform your business finances.
Boost your personal finances or business cash flow
Firstly, buying your property from your company and moving it into your pension can provide a healthy injection of cash into your personal finances, or your business cash flow.
If you personally own your business premises, buying it within your pension frees up your retirement savings and allows you to make use of this money now.
This could be a great option if you’re in need of some extra money to achieve a personal life goal, such as going on holiday or moving home.
Similarly, if the business owns the premises, using your pension funds to buy it can give the business a healthy injection of capital. This money could be invaluable for investing in the business, perhaps for hiring new staff or buying machinery.
Greater tax efficiency
Just as buying your business premises from your landlord would give you the tax-efficient benefits of a pension, so too would moving property you already own into your pension.
You could both remove the possibility of having to pay CGT when you sell or dispose of the property, while also ensuring that your beneficiaries can inherit it without having to worry about IHT.
The only difference would be that, as you already own the property, you may have to pay CGT when you sell it to your pension fund, depending on how much value the property has gained since you bought it.
But there’ll be no more CGT to pay while contained within your pension moving forwards. This could save you a tax bill down the road.
You can also share ownership of your business premises, moving portions of it into multiple pensions.
Additionally, you could even leave part of the property within the control of the business instead if you didn’t have enough to buy it from your company outright.
So, if you had a business property worth £600,000, you and a business partner could each purchase one-third of it for £200,000 through your pensions.
You could then leave the final third in the name of the company.
This can help to spread out the risk of owning the entire property between you and your business partner.
Work with us
You can find out even more about using your pension to help your business, including four more tips that can save tax while also building your retirement pot.
Download your free guide to start making your pension work even more effectively for your business.
Alternatively, please email email@example.com or call 0113 262 1242 to speak to an experienced adviser.
Property can be an illiquid investment, meaning it can be more difficult to access the value than with other types of investment. Additionally, you may incur costs when selling a property, whereas encashing other investments may not give rise to a charge. The value of property can also fluctuate, meaning that you may get back less then you paid.
Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.