VAT advice for SIPP/SSAS Pension Funds
Anderson & Edwards advises individuals and business owners in Edinburgh and across Scotland on VAT advice for SIPP/SSAS pension funds. Whether you’ve already got a SIPP or SSAS or you’re thinking about setting one up, the tax side of it needs proper attention.
Taking Care of Your Future
Your pension is probably your biggest asset after your home. Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSAS) give you more control over your retirement savings than a standard workplace pension. More control is good. But it comes with more tax implications, and they’re easy to get wrong.
VAT advice for SIPP SSAS Pension Funds
Utilising a SIPP or SSAS pension fund to invest in commercial real estate can be a lucrative way of saving for retirement. This applies doubly if the pension beneficiary owns their own business and needs premises to trade from: their pension can own the building and rent it to their business. The business gets tax relief on the rent, but the pension is exempt from paying income tax so the retirement savings pot grows quickly. And all by virtue of a cost that the business would be paying anyway.
However, pension funds are still subject to taxes like VAT and SDLT/LBTT and these are a financial risk to a pension same as anyone else.
Furthermore, because of the income tax benefits associated with pensions, they are subject to a number of rules dictating what they can invest in, what financial receipts they can accept and what financial payments they are able to make out of the fund. If anything happens outside of these rules, an automatic tax charge of 40% will be applied and generally there is a 15% surcharge on top. An effective tax rate of 55% will destroy the performance of most investments.
If a pension administrator or beneficiary is unsure about a specific transaction we can review and advise on how the tax rules apply so that matters can be arranged in the most efficient way.
If this sounds like you, we can help:
- You want to buy a commercial property in your pension but your pension provider doesn’t do VAT
- You tried to deal with VAT on your pension fund ‘in house’ but now there’s an HMRC check on your first VAT Return and you’re not sure how to handle this
- You’re trying to sell a property you own into your pension but the transaction is stalling because of a VAT issue
- You want to convert a property in your pension from commercial to residential but you don’t understand all the tax issues involved
- Your company rents premises from your pension fund but the business is in financial difficulty, has fallen behind with rent, and the pension provider is talking about unauthorised payment surcharges
Talk to an Edinburgh Based Pension Tax Specialist
Iain Harris BSc MSc CA CTA – Associate Director
Give us a call. Pension tax sits at the crossroads of personal tax, company tax and investment, so the first thing we’ll do is understand your full picture. If you’ve got statements or correspondence from your pension provider, have those to hand. We’ll take it from there.