Many consider their pension assets are locked away until their earliest retirement age, currently age 55.

For this reason, business owners can be reluctant to invest their surplus profits into pensions in case they need it one day for their business.   That’s a shame as its possible for Directors to make significant payments into pensions and reduce their corporation tax.  It also moves the business assets from the business bank account into the Directors private pension arrangement and can be more tax efficient than paying themselves a Dividend or salary.

With a reasonable sum invested in a pension there are greater investment options.  The most significant is that the pension is permitted to invest in commercial property and it can buy premises to be rented out.  The pension growth is then obtained from the rent it charges and any increase in the value of the commercial property.  Commercial property held in a pension is free of Capital Gains Tax when it’s sold.  The rental income is also free of tax while held in the pension.

Imagine then; a Director could buy premises with his pension from which his business can operate.  His business pays his pension the rent.  ‘No more rent to a greedy landlord’– self-fulfilling and extremely tax efficient.

Furthermore, the pension is permitted to borrow up to 50% of the value of the pension.  E.g., a pension asset with a value of £300,000 could borrow a further £150,000. This means the business owner could have £450,000 available to complete the purchase.

Secondly it is possible to jointly purchase with other people. For example; Four Company Directors or even husband and wife can consider buying the property with their pension assets combined.

It is possible to partially own the premises with the pension.  It is possible to buy premises that the business already operates from, even if already owned by the business or the business owner.  In this situation the purchase releases the funds from within the pension to the business or business owner and swaps the pension fund for bricks and mortar.  This can be a valuable source of funding for a business.

The Pension House are pension specialists, we provide advice to business owners in this specialist area of pension planning. The first hour of the consultation is provided without charge where we meet here in our offices at the Barn.


Investing in property is not right for every business owner and you should seek independent financial advice before deciding to invest.

Investments can go down as well as up in value, so you could get back less than you put in. You cannot normally access money in a pension until age 55 (57 from 2028).  The tax treatment depends on the individual circumstances and current tax benefits may change in the future.