Our eighth tax tip is about commercial buildings. And, to really save you tax, we’re going to mix it with our seventh tax tip on pensions. Watch our video to learn more.

One of the most tax efficient things you can do is to invest money into a pension. To boost this even more, you could put your money into a Self-Invested Personal Pension, known as a SIPP.

A SIPP can buy a commercial property, for example a property for your business to rent.

Your business then pays rent to the landlord, ie your pension.

Your business therefore claims tax relief on the rent, but your pension receives the rent tax free, up to the annual pension allowance of £40,000.

The other bonus of this is that, one day in the future when you sell the building, any profit you make on selling the building is received by your pension tax free.

So, using a SIPP to buy commercial property is a really wise thing to do.

Even if you are letting it out to other people it’s still a wise thing to do because they’re paying into your pension tax free and one day you’ll sell the building for a tax-free profit.

The slight barrier to doing this for many people is actually having a pension big enough to buy the building. The rule is that you can take out a mortgage on a building bought by a pension, but the mortgage can be a maximum of one third of the value of the building.

So, as an example, if you want to buy a building worth £300,000, you need to have £200,000 in the pension because you may only borrow £100,000.

So get saving in your pension now!

If you would like any more information, please feel free to get in touch.