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For two years, Nick and Greg have run an architectural practice. The practice is succeeding, with turnover consistent. It emerges in their annual adviser review meeting that they wish to grow the company, and believe they can do so by purchasing business premises – previously they have rented.
Client aims and objectives
- Raise the necessary capital to purchase a town centre property that they have identified.
- Do so without taking on debt additional to their private mortgages; both men are in their forties and have young families.
- Use of SIPPs. After investigating an available property that Nick and Greg identified as suitable, we would advise using the cumulative funds held in their directors’ Self Invested Personal Pensions (SIPPs) to meet the purchase value.
- Property renovation. By combining SIPPs, Nick and Greg have more than enough funds to meet the asking price. No additional borrowing would be necessary. There are also enough funds within their SIPPs to renovate the property.
Nick and Greg are able to purchase the premises they identified using the combined values of their SIPPs. To address the potential of a pension gap, Nick and Greg now pay an appropriate level of rental income from their business account back into their SIPPs. This qualifies as a business expense deductible from Corporation Tax.