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Best way to buy business premises / building?

Best way to buy business premises / building?


I’m wishing to advise a new client on the purchase of a green grocer and its premises.

Building to be purchased at £175k and business £25k.

Father and son partnership (well, to be partnership or limited). Building to be mortgaged.

What’s the most tax efficient way to buy the building?

Building is the shop premises and has a domestic flat to rent upstairs.

Now, if your recommendation is to buy the building through a pension scheme then this is where I have no experience. Please give details. How would I go about it? Who manages the scheme?

Look forward to your thoughts.

Thank you.


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29th Jun 2012 12:00

If using SIPP ...

First of all decide whether the pension route is the best one - the problem in this area is that sucessive Governments bleat about people not making provision in retirement and then make it not worth while to use the SIPP vehicle. Probably a lot depends on whose pension buys the building and your exit route - once it goes into a pension you get tax allowances but quite frankly if only a BR taxpayer then arguably not worth doing. Would you be better off having all the value on sale or comfortable with having it locked up in a pension with Government rules changeable on a whim

See pension GAD rates etc. for drawing income & annuity rates (falling by the day)

If you decide to go ahead with a SIPP route then find a provider allowing commercial property and check that you meet the borrowing requirements (if loan required - 50% of pension nav)

Note, there is a 'gotcha' with the residential aspect of the property - see specific rules

Example -

Personally would not go anywhere near a pension in the light of the Government 'stuffing' income drawdown etc. by reducing GAD from 120% to 100% and further reducing income by artificially low medium term gilt rates (to bail out the banks & feckless who cannot afford morgage repayments) - much rather have the capital in ones own hands instead of being dictated to by Governments

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