Bury-based law firm Clough & Willis has reported a 22% rise in clients using tax-efficient pension planning options in order to release equity in their properties.
The year-on-year increase is around enquiries into the use of a self-invested personal pension, or a small self-administered scheme, to release equity from current business premises or fund the purchase of a new commercial property.
Clough & Willis claims that the rise in the use of these options is because people are still shying away from traditional lenders or are finding it hard to secure finance, and have become more aware of these tax-efficient schemes.
The SIPP allows individuals to make their own pension investment decisions, including deciding what assets are bought, leased or sold, and within what time frame. The SSAS is a type of occupational pension, and allows investments to be made free of Capital Gains Tax. The trustees of the pension fund can allocate the money as they deem appropriate, including using the pot to invest back into the company which is sponsoring the scheme.
SIPP investments became popular before the global financial crisis, with commercial property dominating pension portfolios. However, with market uncertainty, the softening of rents and less attractive yields, SIPP property deals became less frequent.
David Leviten, head of the commercial property team at Clough & Willis, said: "Buying a commercial building via a SIPP or a SSAS can be a good option but it can also be a complicated process. The key is to take the right advice from both a specialist property solicitor and from a financial advisor to ensure you know the potential pitfalls as well as the obvious tax benefits."