SIPP Commercial Property and SSAS Purchases: Buying Your Business Premises Through a Pension
The business has rented its unit for a decade, the landlord keeps raising the rent, and a sizeable pension pot sits in funds nobody looks at. Why not let the pension buy the building and pay the rent to ourselves? SIPP commercial property and SSAS purchases exist for exactly that idea: buying commercial property through a pension, with your trading company as the tenant. They can work well. They also come with tax rules that bite hard if the structure is wrong, and those rules belong to pension specialists, not to a mortgage broker.
Business Mortgages Broker is a trading name of Lenzie Consulting Ltd (company number 08174104). We arrange business mortgages for trading companies buying or refinancing the premises they trade from; we are a broker, not a lender. The business was founded by Matt Lenzie, who has 25 years in financial services, raising debt and equity, and around £400m arranged. Commercial lending to a limited company is unregulated and falls outside the FCA’s regulated mortgage perimeter. Where a deal would be regulated, for example lending to a sole trader or individual, or a property where the borrower or a close family member will live in part of it, we refer it to an appropriately authorised firm. On pension purchases we go one step further: we introduce, and we arrange the scheme’s borrowing where a scheme borrows. We never give pension advice. Whether your SSAS or SIPP should buy property at all is a decision for a regulated pension adviser or your scheme administrator.
In this episode, Georgina talks through how a pension ends up owning the building your company trades from, and where the borrowing fits.
Can you hold commercial property in a SIPP?
In principle, yes. SIPP commercial property can be an office, a workshop, a warehouse or an industrial unit, provided the provider’s own rules allow it. Not every SIPP provider accepts direct property, and those that do set their own requirements on the building, the lease and the fees. The first conversation is with the provider or a regulated pension adviser, not a lender.
What a SIPP and SSAS cannot comfortably hold is residential property. HMRC’s guidance for pension trustees says that where a scheme is an “investment regulated pension scheme”, broadly one where a member can influence how their own pot is invested, investing in taxable property is an unauthorised payment, and taxable property includes residential property such as a building used or suitable for use as a dwelling. A SIPP or SSAS where the members direct the investments will generally fall into that category. That matters for the shop with a flat above or the pub with living accommodation: a mixed building with a residential property element needs specific advice before the scheme goes near it.
A commercial property investment held in a pension is a recognised route to owning the premises your business occupies, provided:
- the building is genuinely commercial, with no residential element the scheme would be holding;
- the scheme’s trust deed or the SIPP provider’s terms permit direct property;
- a regulated pension adviser or the scheme administrator has signed off the purchase as suitable;
- every transaction between the scheme and your company happens on commercial terms.
SSAS and SIPP: how each scheme buys business premises
The two vehicles reach the same end, a pension scheme that owns a commercial property and collects rental income, by slightly different paths. Across the United Kingdom, both are registered pension schemes, and both invest under the same HMRC investment rules.
A small self-administered scheme, or SSAS, is an occupational pension scheme set up by a company, usually for its directors and sometimes for key staff. The members are typically the trustees, so they make the investment decisions together, with a professional scheme administrator handling the HMRC side. Several directors can pool their pension money in one SSAS, which is often how a scheme reaches a size where buying a building is realistic.
A self-invested personal pension, or SIPP, is a personal pension that one individual holds with a provider. The provider, or a trustee company it appoints, is the legal owner of anything the SIPP buys.
The steps in a typical pension property purchase
- A regulated pension adviser or the scheme administrator confirms the pension scheme can and should buy property.
- The scheme instructs a solicitor and a RICS registered valuer to report on the building.
- If the cash in the scheme is not enough, the trustees borrow, within HMRC’s limits.
- The scheme completes the purchase and the legal title is registered at HM Land Registry in the trustees’ or provider’s name.
- The company signs a formal lease and starts paying rent to the scheme.
Our part sits at step 3 and, where you need it, in the introduction at step 1. The investment decision itself is never ours.
How much can a SSAS or SIPP borrow? HMRC’s 50% rule
This is the number that shapes the whole deal. HMRC’s gov.uk page, Tax on investments for pension trustees (checked on 15 October 2026), says a registered pension scheme can borrow money from an individual, a company or a financial institution. If the scheme borrows more than 50% of the value of the fund, the scheme administrator has to pay a 40% scheme sanction charge on the amount above the limit.
In practice the pension borrowing rules cap the loan, not a lender’s loan to value appetite. A specialist lender might be comfortable lending a higher percentage of the commercial property’s value, but the scheme is limited by the size of its own fund, so the borrowing rules decide how much property investment the scheme can make.
Illustrative example. A SSAS holds £400,000. Under the HMRC limit it can borrow up to £200,000, giving the trustees £600,000 to work with before costs. If the trustees borrowed £250,000 instead, the excess would be £50,000, and a 40% charge on that excess is £20,000. The rule is a ceiling to stay well under, not a target.
Lending the other way: a loan from the scheme to your company
HMRC treats a loan from a pension scheme to a member, or to a company connected to a member, as an unauthorised payment. The narrow exception it describes is a loan from an occupational pension scheme to one of its own sponsoring employers, and the same HMRC page lists the conditions. The loan:
- cannot run for more than 5 years;
- cannot be more than 50% of the net value of the scheme assets;
- must be secured by a first charge on assets of at least equal value to the loan plus interest;
- must carry interest of at least 1% above the average base lending rate of the main high-street banks, as HMRC defines it;
- must be repaid in equal annual instalments.
That route is for the scheme administrator and a regulated adviser. We mention it only because owners confuse it with the scheme borrowing to buy property.
The lease and rental income between the scheme and your company
Once the scheme owns the building, your company becomes its tenant. HMRC’s guidance is clear that a scheme can enter into transactions with a member, a scheme employer or someone connected with them, but if the transaction is not on a commercial, arm’s length basis the scheme has made an unauthorised payment. A company is connected to a member if the member controls it, which describes almost every owner-managed business buying its own premises this way. HMRC points to its Capital Gains Manual for the detailed definition of a connected person.
For the lease, that means:
- a formal written lease, prepared by a solicitor, on terms an unconnected landlord would accept;
- a market rent, usually supported by the valuer’s opinion, with rent reviews that actually happen;
- rent paid on time, every time, by the company to the scheme;
- repairs, insurance and service charges allocated in the lease as they would be with a third-party landlord.
The rental income flows into the pension rather than to an outside landlord. Under the tax relief HMRC describes for scheme investments, the income and gains from most pension scheme investments are not taxable. How the rent sits in the company’s corporation tax computation is a question for your accountant. The temptation to set a low rent when trade is quiet, or a high rent to push money into the pension, is exactly the kind of non-commercial term that creates the tax problem.
When a pension buys your premises, your company stops being the owner and becomes the tenant, and every decision after that has to survive the question of whether a stranger would have agreed to it.
Lenders to pension trustees read the lease closely, because the company’s rent is what services the scheme’s loan.
Stamp duty, VAT and purchase costs inside a pension
The scheme is the buyer, so the scheme pays stamp duty from its own money, alongside legal fees, the valuation, lender fees and the administrator’s property charges.
For a sense of scale, take the same £500,000 freehold unit. Using HMRC’s non-residential Stamp Duty Land Tax bands, the SDLT in England or Northern Ireland is £14,500. Scotland and Wales use their own taxes, collected by Revenue Scotland and the Welsh Revenue Authority, which give a different figure on the same price. Rates as at October 2026; check the current rates before you buy. Our guide to stamp duty on commercial property sets out all three.
Illustrative example, continued. The SSAS above has £600,000 of buying power with £200,000 borrowed. On a £500,000 unit in England it pays £14,500 in SDLT and keeps £85,500 to cover fees, any VAT exposure and a cash reserve. That reserve matters: the scheme still has to meet loan repayments if the tenant pays late.
If the seller has opted to tax, VAT is added to the price; whether the scheme should register to recover it is a question for the scheme administrator and an accountant before exchange.
Who does what: scheme administrator, regulated adviser and us
Deals stall when nobody is sure who is responsible for what. The roles usually divide like this.
| Role | What they do | What they do not do |
|---|---|---|
| Regulated pension adviser | Advises whether buying property in a SIPP or SSAS suits your retirement plans | Arrange the loan or act for the scheme legally |
| Scheme administrator or SIPP provider | Runs the scheme, reports to HMRC, approves the purchase and the lease | Give you independent financial advice, unless separately appointed |
| Solicitor | Acts on the purchase and drafts the lease between scheme and company | Decide whether the investment is suitable |
| RICS registered valuer | Values the building and supports the market rent | Advise on pension tax |
| Business Mortgages Broker | Introduces, and arranges the scheme’s borrowing where it borrows | Give pension, tax or investment advice |
If you come to us first, we will ask whether a pension adviser or scheme administrator is already involved. If they are not, we will introduce you to one before anything else happens, because a lender will not lend to a scheme whose administrator has not approved the purchase. You can read more about buying premises through a pension on our main site, and about how the process works from first call to completion.
Pension property purchase versus a company business mortgage
SIPP commercial property is not automatically better than the company buying its own building. It is a different set of trade-offs, worth comparing before you see an adviser.
| Point of difference | Pension scheme buys | Company buys |
|---|---|---|
| Who owns the building | The scheme trustees | The company |
| Deposit source | Pension fund, plus borrowing up to the HMRC limit | Company cash, typically 25 to 30% of the price |
| Ongoing payment | Company pays rent to the scheme; scheme services its loan | Company services the business mortgage |
| Rates | Priced case by case for pension trustees | 6.0 to 7.5% a year, indicative, subject to status, accounts and valuation |
| Term | Set by the lender and the scheme’s plans | Typically 5 to 25 years, some to 30 |
| Security registration | Charge registered at HM Land Registry against the trustees’ title | Charge registered at HM Land Registry and at Companies House within 21 days |
| Who must advise | Regulated pension adviser or scheme administrator | Solicitor and accountant |
A company purchase keeps the commercial property on the balance sheet and leaves the pension free to invest elsewhere. Lenders active in owner-occupier lending typically go to 70 to 75% loan to value, up to 80% for strong cases, and price business mortgages as a margin over Bank Rate, set by the Bank of England. If the business has the deposit, an owner-occupier mortgage for a trading company is simpler to set up and simpler to unwind.
A pension purchase moves rental income into a tax-advantaged wrapper and keeps the commercial property outside the company, away from the trading risk. Against that, the money is locked into the pension, the building is hard to sell quickly if the scheme needs cash to pay benefits, and the scheme cannot easily lend the company money back.
If the company already owns the building and later considers selling it to the pension, that sale is a connected-party transaction under HMRC’s rules and must be at market value.
Questions owners ask about SIPP property
Which SIPP provider is best for investing in commercial property?
We cannot answer that. Providers differ on whether they accept commercial property at all, on fees and on borrowing, and a regulated pension adviser compares them for you.
What will happen to the SIPP rules in April 2027?
An HMRC policy paper published on 26 November 2025 says most unused pension funds and death benefits will be brought within a person’s estate for Inheritance Tax from 6 April 2027. That could change how a pension that owns a building is treated when a member dies. It is precisely the kind of change to raise with your regulated adviser now, before the scheme commits to a long-term asset.
How much can a SSAS borrow?
Up to 50% of the value of the fund before HMRC’s 40% scheme sanction charge applies to the excess. A £300,000 fund can therefore borrow up to £150,000 without that charge.
What is the most tax-efficient way to buy commercial property?
There is no single answer. It depends on your profits, your pension position and your plans for the business, so it is a question for a regulated adviser and an accountant.
Can the scheme get a commercial mortgage on the building?
Yes, within the borrowing rules. A SIPP commercial property mortgage, or the SSAS equivalent, is made to the trustees, secured on the property, and repaid from the rental income your company pays. We arrange that borrowing where a scheme borrows.
Talk to us
If your pension adviser or scheme administrator has confirmed that a property purchase is right for your scheme, or if you want to compare it with the company buying directly, we can set out the borrowing on both routes. Start on our main site and tell us about the building, the scheme and the business.
All figures in this article are indicative and illustrative, not an offer of finance. Rates are indicative, subject to status, accounts and valuation. We are not tax, legal or pension advisers: the decision to buy property in a SSAS or SIPP must come from a regulated pension adviser or the scheme administrator, and tax points should be confirmed with your accountant and solicitor.