Investing in property through a Small Self-Administered Scheme (SSAS) is a smart way for business owners to grow their pensions tax-efficiently while gaining control over their commercial property needs. But how does it actually work in practice?
In this guide, we’ll break down key considerations when housing property in a SSAS and explore real-life scenarios where business owners use their pensions to invest in property.
Why Buy Property in a SSAS?
A SSAS is a type of pension scheme that allows business owners to take charge of their retirement funds and invest in commercial property. Unlike traditional pensions, a SSAS can:
✔ Buy and own commercial property
✔ Receive rental income tax-free
✔ Avoid Capital Gains Tax (CGT) on property sales
✔ Loan money back to your business for property development
However, strict rules apply, so careful planning is essential.
Key Considerations Before Buying Property in a SSAS
- Property Type & Eligibility
✅ Allowed: A SSAS can invest in commercial properties, such as:
- Offices
- Warehouses
- Industrial units
- Retail spaces
- Land for development
🚫 Not Allowed: A SSAS cannot directly own residential property unless it is part of a mixed-use development or qualifies as job-related accommodation.
- Funding the Property Purchase
💰 SSAS can fund the purchase through:
- Existing pension funds
- Pension contributions from the business
- Borrowing (up to 50% of the SSAS’s net value)
- Pooling funds with other SSAS members
- Tax Benefits
✔ No Corporation Tax – Rental income in the SSAS is tax-free
✔ No Capital Gains Tax (CGT) – No tax on future property appreciation
✔ VAT Considerations – If the property is VAT-registered, the SSAS may reclaim VAT
- Using the Property in Your Business
🏢 Your business can lease the property from the SSAS – This must be at market value, and rental payments are tax-deductible for the business.
📜 A formal lease agreement must be in place to comply with HMRC rules.
- Borrowing & Debt Considerations
🏦 The SSAS can borrow up to 50% of its net value to purchase property. Any loan must be on commercial terms and secured against the asset.
- Exit Strategy & Liquidity
🚀 If all SSAS funds are tied up in property, members may struggle to access cash for retirement. Future sale or refinancing options should be considered.
3 Real-Life Scenarios of Using a SSAS for Property
Scenario 1: Buying Your Own Commercial Premises via SSAS
🔹 The Situation:
James runs a successful construction business and currently rents a warehouse for £3,000 per month. He wants to stop paying rent to a landlord and own the property through his pension.
🔹 Solution:
✅ James’ SSAS buys the warehouse for £300,000
✅ The SSAS has £200,000 in cash, so it borrows £100,000
✅ His company rents the warehouse from the SSAS at market value (£3,000/month)
🔹 Benefits:
✔ The business gets tax-deductible rent expenses
✔ The SSAS grows tax-free through rental income
✔ No Capital Gains Tax when selling the property
🔹 Challenges:
⚠ Mortgage required (SSAS borrowing rules apply)
⚠ Rent must be at market value
Scenario 2: Using a SSAS for Property Development
🔹 The Situation:
Sarah and her two business partners have a SSAS pension worth £500,000. They want to buy land and develop commercial units.
🔹 Solution:
✅ SSAS buys the land for £250,000
✅ SSAS lends £200,000 to their company (via a SSAS Loanback)
✅ Their company develops three commercial units and leases them out
🔹 Benefits:
✔ SSAS funds are used to develop assets
✔ Loanback allows the business to grow while repaying the SSAS
✔ Rental income is tax-free in the SSAS
🔹 Challenges:
⚠ Loanback rules apply – must be secured & repaid on commercial terms
⚠ Liquidity concerns – funds are tied up in property
Scenario 3: Pooling SSAS Funds to Buy an Office
🔹 The Situation:
Mark, Tom, and Alex each have SSAS pensions worth £150,000. They want to combine their pensions to buy an office building for £400,000 to rent out.
🔹 Solution:
✅ Pooling SSAS funds creates a £450,000 investment pot
✅ The SSAS buys the office outright
✅ A third party rents the office, generating tax-free income
🔹 Benefits:
✔ Allows for larger property purchases
✔ Each SSAS member owns a share of the asset
✔ No CGT or corporation tax on rental profits
🔹 Challenges:
⚠ All members must agree on future decisions
⚠ Liquidity planning – one member retiring early may need an exit strategy
Is a SSAS Right for Your Property Investment?
A SSAS pension can be a game-changer for business owners looking to invest in commercial property while enjoying significant tax advantages. However, it’s essential to:
✅ Ensure compliance with HMRC rules
✅ Consider funding & borrowing limits
✅ Plan for liquidity & retirement access
✅ Seek expert advice before proceeding
At SGL Accountancy, we can help structure your investments tax-efficiently while ensuring full compliance.
📩 Want to explore how a SSAS could work for your business? Contact us today!