The nature of running a business can make saving into a pension feel wasteful when your focus is on the here and now. However, what many of our clients don’t realise is that your pension can actually help grow your business, as well as generate an even bigger nest egg for your retirement. This can all be possible by investing in what is known as a pension property purchase.
Use a Pension Property Purchase to Invest in Your Business
Here, we’ve broken it down into three simple reasons why this is a valued opportunity for business owners in the North East.
1. Make use of your pension now.
Saving into a pension scheme is often a dutiful act that you wouldn’t feel or see any benefit from until you are over 55. However, pensions have powerful tax advantages that make them ideal sources of investment. With a pension property purchase, you can buy your business premises using your pension, lease it back to the business and then the monthly rent paid will top up your pension tax-free.
2. Give your business a cash injection.
If you already own your premises, by buying it using a pension scheme you are creating a cash injection for the business. This gives you an opportunity to invest in corporate growth and expansion plans immediately, whilst also maintaining your pension for the future.
3. Boost your retirement savings.
Technically, the pension owns the premises, so any capital gains made are also tax-free. This combined with the monthly rent means you have increased the monthly payments into your pension, which can generate greater wealth, more quickly, that can be enjoyed during your retirement.
How to Use a Pension Scheme to Invest in Commercial Property
So is a pension property purchase is starting to sound like a no-brainer? Well, there are a few factors still left to consider, but that’s what we are here for; to help with the details.
We can open a Self-Invested Personal Pension (SIPP) for you and arrange the transfer of your pension. A SIPP allows you to own commercial property tax-free, where as other pensions do not.
If there are not enough funds in your pension to purchase your commercial property, a SIPP also allows you to borrow up to 50% of its value, which can help make up the difference.
We will need to budget for extra costs such as stamp duty and surveyor fees, but our experts can help arrange this in the most cost-effective way for you so you don’t end up paying over the odds.
Want to Know More about Pension Property Purchases?
If you are self-employed you need to consider retirement planning seriously. Otherwise, you could face financial hardship later on. Our advisors Karen and Colin are available to discuss your options and create the right plan for your lifestyle and your business. Get in touch if you want to chat it through.