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  • Mortgages & Finance

    Pension or SIPP - monthly instalment option?

    I currently pay a good amount into a personal pension scheme via my employer each month.

    My plan was to have both the personal pension and a property portfolio (which invests in itself).

    However is there a way to have a 'pension' scheme whereby it is invested in a property mechanism each month rather than a standard type private pension scheme?

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    Don't think property can go in to pensions at present - and you need also to be mindful of the lowered Lifetime Allowance of £1.05 million.

    If you are a high earner then the combo of self/employer contributions and tax relief plus fund growth could easily push you up to the max LA.

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    I will gladly share with you what my wife and I have done with respect to a SSAS.

    Just over a year ago we created a SSAS Pension aligned to our Limited Company as we wanted greater control over our pension fund (I would share with you the specialist that we used but this is my first post and I dont really know if I am allowed to).

    Our SSAS Pension gives us the following flexibility:

    1 - it is possible to make "loanbacks" to your limited company at agreed/feasible interest rates - this allows us to fund further investment purchases through our Limited Company which means we can invest in land, residential and commercial property - at the end of the "loanback" period (we go for 12 months) the loan plus interest is paid back to our SSAS Pension, where the interest element is Corporation Tax deductible from our Limited Company and Tax free with respect to income into the SSAS Pension

    2 - our Limited Company can also make pension contributions into our SSAS Pension which are a deductible expense for Corporation Tax

    The plan for my wife and I is to utilise the money we make from our properties, to which we have 19, to help grow our pension fund in a tax efficient way.

    I hope this helps

    Regards Craig

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    The rules about pensions schemes are fairly tight and whilst SIPPs and SAAS's give flexibility residential investment is not permitted. It is sufficiently widely drafted I would be concerned even about a freehold reversionary interest. The penalty is that it is considered an unauthorised withdrawal.

    Saying all that something crossed by desk in the last month or so which said that you could do so if you had 10 investors. I have not looked into this so it may just be sales rubbish (another scheme which does not stack up). It is something I plan to research just in case.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022