The strategy I am going to share with you today can be very effective for some people in certain situations. It is not appropriate for everyone and specific advice should be taken if you think it is right for you.

So let’s say you and your husband/wife are interested in paying a one-off contribution into your pensions. But unfortunately your business is not cash rich and faces a big corporation tax bill at the end of the financial year. The property from which they trade is 100% owned by your company and there is no outstanding mortgage on the property. You have recently had it independently valued at £120,000 and VAT does NOT apply to the property. Now if the property was owned by the pension fund instead, the pension could lease the property back to your company by way of a five year lease at an ‘arm’s length’ rate of rent. i.e. a commercial rent.

Here is the interesting bit. The property could potentially be used as an “in specie” contribution into a SIPP. The property share value could be 50% each or in other proportions.

So how does it work?

  • The property purchase price is £120,000.
  • The property will be paid as a “company contribution” to the SIPP (value £120,000), so no pension contributions are made (i.e. you putting money in), other than the fees to set up the scheme and legal fees.
  • In this situation you will need to use “Carry Forward” unused pension contribution relief, as the annual allowance is £40,000 a year per person.

The Legal Debt process

  • A new SIPP is set up to facilitate the ownership of the property
  • You complete the relevant “in specie contribution” forms.
  • Your SIPP becomes the legal owners of the Property
  • Arrangement and legal fees are paid by the scheme, so a cash contribution need to be paid into the scheme to cover the set up costs


  • Your company no longer owns the property.
  • Your company then leases the property from the SIPP at a commercial (‘arm’s length’) rate of rent under a formal lease.
  • The scheme receives this income as “investment growth” can be invested under the guidance of a financial adviser.
  • The scheme can also accept future pension contributions, to help build a retirement fund as well as helping reduce your Corporation tax liability.
  • Using a SIPP in this way can help you accelerate the value of pension scheme through receiving both rental income and company contributions, which would be in excess of the annual allowance of £40,000.

We think this is efficient way of not only owing your own property, but also building a very effective potential income for you in retirement.

Always consult a qualified financial adviser before making any tax or investment decisions. The above article is only for guidance and should not be taken as advice. If you would like to talk to me about getting your future investments on track please contact me.

Contact Martin Dodd on 01902 742221 or email him at martin.dodd@miadvice.co.uk if you would like talk about money issues.

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