There are a range of ways that Directors or Business Owners can structure their pensions to benefit both them as individuals and the business. However, it is important to plan carefully to ensure that the measures adopted meet your objectives.
Self-invested pensions can provide a useful tool for business owners who wish to hold their businesses premises within their pension fund. There are two types of self-invested pension scheme:
- Self-Invested Personal Pension (SIPP): this is a scheme set up for the individual and can hold commercial property as part of its investment portfolio. The property can be owned by a syndicate of SIPPs so this route may be suitable for shared ownership by the business’s directors or partners.
- Small Self-Administered Scheme (SSAS): a SSAS is not just a pension scheme, it is a distinct corporate entity with some attractive features for business owners:
- It can hold a wide range of investments, including commercial property, so is often used to finance business premises.
- It can also hold up to 5% of shares in its sponsoring company.
- It can make loans back to the company to aid cashflow or for capital purchases such as equipment.
Self-invested schemes can offer flexibility and are a key option for business owners looking to invest in their business premises. However, careful planning is critical – especially when looking at substantial pension fund sizes where property price increases could potentially tip fund values over the Lifetime Allowance for Pensions.