- agricultural land
- industrial/business units and warehouses
- land for commercial development
- marine berths
- nursing homes
- public houses
- commercial property with a residential element may only be accepted
- (i) if the residential element is occupied by an employee of the tenant as a condition of their employment and they are not connected with their employer or the pension scheme member or anyone connected with the pension scheme member (e.g. a caretaker’s flat) or
- (ii) it is occupied by a person who is not connected with the pension scheme member or anyone connected with the pension scheme member, in connection with the commercial element (e.g. a flat above a shop that is leased with the shop and the flat is occupied by the person plying their trade from the shop).
Acceptance of any commercial property is subject to satisfactory due diligence and Dentons will review all property purchases on a case-by-case basis*. Non-permanent fixtures and fittings must be excluded from the property purchase otherwise they can give rise to a tax charge.
In all cases our Commercial Property Questionnaire must be completed and returned to us for our review and prior acceptance. If it is land only, we will also require a map/plan of the land showing boundaries, access points and a business plan to show it is commercial and will provide a return to the pension scheme.
Commercial Property development
Commercial property held in a SIPP or SSAS can be developed or refurbished provided no residential element is added. Similarly, land can be purchased and used to develop commercial premises. We will need to see written quotations and details of the proposals so we can authorise the improvements or development prior to any work taking place.
If you or a connected persons' business is to undertake the property development/refurbishment, we will require quotes from that business along with quotes from at least two other unconnected businesses for comparison purposes.
There are a number of properties that we will not accept:
- beach huts
- commercial freeholds, where there is also a reversionary interest in residential leasehold within the property
- holiday lets
- overseas property
- residential property
- student flats
- time shares.
Residential property is not permitted other than in very few exceptional circumstances. Commercial property with a residential element may only be accepted if it can be demonstrated that the residential element is an integral part of the property, such as a caretaker's flat or a flat occupied by an employee as part of their terms of employment.
The employee cannot be connected to any pension scheme member and any rent paid will need to be on a commercial basis.
Frequent commercial property purchases
If a pension scheme becomes involved in the frequent purchase and/or development and selling of commercial properties, HMRC may deem such transactions as 'trading'. Whilst both capital and income investment gains are normally tax exempt if trading applies any associated income and capital gains would then be taxed accordingly. If you have any queries on whether a property is suitable to be purchased by a Dentons self invested pension please contact us.
*HM Revenue & Customs (HMRC) impose tax penalties if certain types of property are acquired. We reserve the right to refuse property purchases and/or any proposed developments of property if we believe that the purchase or development may give rise to a tax charge or there are unacceptable levels of potential risk such as contamination.