This week’s query relates to how best to purchase your company’s trading premises. This is a fairly common question for us and each case needs to be addressed on its own merits. However, as a broad guide, the options available are as follows.
- Buy the premises personally. This keeps them away from company ownership, which means they are part of your estate and are therefore retained if you sell the company. However, tax will be payable on the rent the company pays you and on disposal should you sell the company.
- The company buys the premises. However, there are issues if you choose to sell the company on retirement, for example. Even worse, if the company should fail, then potentially you will lose the company AND the premises. You can avoid this by possibly buying the premises in a separate ‘holding’ and effectively ring-fencing them.
- A popular method nowadays is to purchase the premises via a pension scheme – be it a SIPP or a SSAS. This means they are a part of your estate which avoids any issues on the sale or demise of the company. Also, the company gets tax relief on the rent it pays, but the pension scheme does not pay tax on the rental income it receives nor on the proceeds should you decide to sell the premises. This route does mean you are tying up your money in a pension scheme which can be accessed in a phased, tax efficient manner only after the age of 55. Also, there are restrictions on pension schemes borrowing, although these can be managed with some forward planning – you can contact 360 Wealth Management at help@360wealth-management.co.uk for more details on this.
If you are thinking of purchasing some trading premises 360 are more than happy to talk through your options. Call 01482 427360 or email help@360accountants.co.uk.
