The Goose that laid the golden egg

Hi Chris,

Commercial property can be invested into a pension and does not carry the stamp duty surcharge penalty.

Pension advice is the most regulated type of advice. If you have incurred loss due to poor advice then I would recommend you instigate the advising firms complaints procedure.

The rental income from commercial property held within a SIPP is also free from income tax. It's also possible to set up your buy to let operation as a limited company, the 'salary' you pay yourself from the company would then qualify as tax-relievable contributions for your SIPP - obviously lots of other considerations (both drawbacks and advantages) of going down this route.

I am a regulated Financial adviser and so I declare this answer must be regarded as generic advice only and not regulated advice.

If you used an adviser to set up your SIpp this would be classified as bad advice and so you should approach them with a complaint. If you did it directly then I doubt you have any grounds for complaint.

You should take advice to place your properties into a limited company and then the pension contributions you can make.

However at present if you work out the hours you work on your property management and charge a separate management fee this would be classified as earned income which is then able to be placed into pensions. Of course it depends if the income generated would exceed the £3600 anyway. Also you would need to check with a tax accountant if you can do this now for previous years.

If you have a dozen properties in London you also have a large potential Inheritance tax bill which can be avoided with proper advanced planning. This is an area in which I specialise so please let me know if I can help.

I think if your properties are in limited company you can pay yourself a pension before tax up to the total income of the company. But I am not an expert and this would need to be clarified by an expert or someone who has done this before.

Thanks for bringing this poitou to everyone's attention. I'm still in a full time job so not an issue for me. If you do end up settings up a Ltd company then I would suggest that you look at SASS. Remember every ones circumstances are unique and you need to take professional advice.

Thanks to everyone for your replies. To clarify, I did not take any advice but acted off my own bat when I took out the SIPP. I made a small contribution to the SIPP initially just to see how the whole thing works and to get some confidence in it before making a bigger commitment. Dissapointing as it that it seems my tax pounds are not as good as someone's tax pounds who is in employment, the outcome that I can at least pay in £3600 gross and get tax relief (x2 as I can do the same for my wife) is some small result so the whole exercise has not been a compete disater. At the end of the day I will be claiming back some £700 of my taxes which cant be bad. The net result is that I can 10 years growth from the Stockmarket on my sipp before thinking about drawing any pension at age 65.

There is another aspect to pensions in general in the post clause 23 world. When I was a boy I had a job (I knew no better) and my employer made payments into a DC pension scheme for me. I have seen this grow over 25 years and it is now a very healthy sum. Heres the catch. As a reasonably successful landlord, Mr Osborne has made artificial higher rate tax payers out of both myself and my wife when under the old rules we were not . So should I try and access funds from my occupational DC pension pot (I am over 55) any money I take after the first 25% will be taxed at 40% when under the old rules I feel I could have managed the withdrawls to keep my tax rate at 20% if I so chose.

So I reckon I have been well and truly shafted on several fronts.

Thank God I did not vote Tory last time....

You could form a Ltd company to carry out some work that you as an individual may be doing in connection with these properties. Maybe management or maintenance. So you pay this Ltd co a mgt fee every month. In turn they pay you a paye salary every month (a small salary of maybe £5 - £6k pa means that no tax or NI will be deducted at source and keeps things simple) AND the Government will even credit you with NI contributions for your state pension as well. You can then invest as much salary as you want into your sipp and get pension tax relief.

It's not as hard as you think running a simple company like this. Many contractors, BBC newsreaders etc do it. Please check the exact current figure on HMGOV I think it's called the Lower Earning Limit.