Spring Budget 2023: investing in commercial property through your self-invested personal pension (SIPP)

• The income acquired from property held under the pension scheme is exempt from income tax;
• If a gain arises on the disposal of the commercial property, the capital growth in the property will belong to the pension itself rather than an individual and will not attract capital gains tax;
• The commercial property owned by the SIPP will not form part of your estate for inheritance tax purposes, and
• Investing in property through a SIPP allows you to leave money in your pension for your family to inherit after your death, and they may be able to draw a tax free income from this.

Investing in property yields significant capital growth and long-term returns, which is attractive to investors. The potential lifting of the lifetime allowance is an opportunity to invest in commercial property through a SIPP, as it is an efficient way of adding money to your pension, through the accumulation of surplus rent, without having to pay additional tax.

Investors may now be able to save an unlimited amount of money in their pension pot, taking advantage of the full tax benefits of a SIPP without breaching the lifetime allowance limit and incurring tax charges. The extension of the annual allowance enables individuals to contribute more to their SIPP each year, which increases the buying power of investors.

If you wish to make an investment, whether that be buying commercial property through a SIPP, it is advised that you seek independent financial advice before doing so.