Pension Scheme Property Purchase
The client is a small Limited Company with three directors. The Company owns a commercial property from which the business is run. The Company would like to raise some money for business expansion and improve their liquidity.
- Company owns property valued at £600,000
- The limited company wants to expand but is finding it difficult to get funding in the current climate
- They are also keen to increase their liquidity
- The three Directors have pension funds valued at £250,000 each
- Currently they are in a range of insurance company funds from different insurers with no clear strategy.
- Directors set up a SIPP
- Ltd company sells the property to the SIPP
- Remaining portion is invested in funds suited to the individuals’ attitude to risk.
Benefits from advice given
- Liquidity of £600,000 now available to the Ltd Company for business expansion.
- Rent from the company is paid into the Directors’ SIPPs, providing regular pension input.
- Rent paid into the SIPP by the company should be tax deductible for the business and is received tax free by the SIPP.
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This example is for illustrative purposes only, based on current legislation and tax allowances. Tax rules and regulations are subject to change.