SIPP property

What is a SIPP?

A SIPP (Self Invested Personal Pension) allows you to invest in a wide range of asset classes without paying tax on any non-dividend income you earn from those investments. It essentially allows you to make the most of investments geared towards your pension through tax relief.

You can use your SIPP allowance – capped at £50,000 per tax-year – to invest in commercial property. You do not need to pay capital gains tax on the sale proceeds of a property if it is held in a SIPP and you can reclaim VAT on any property improvements.

It will also allow you to borrow 50% against a commercial property's value and you can use the SIPP to invest in as many commercial properties as you like.

Will it suit me?

There is an element of risk involved; you have to be confident that the commercial property will make a solid investment if you use a SIPP for this purpose. Providers also charge fees; typically, there will be a £300 fee to open the fund and roughly a £500 annual management thereafter.