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Sale of Property to Pension Fund

Facts

The owner of a trading company also owned the property from which the company traded from.

Our Advice

To take advantage of the outgoing taper relief regime, we advised that he sold the property to his personal pension fund for market value. The pension funds’ acquisition was financed by a pension contribution from the trading company.

Outcome / Savings

Our client received cash equal to the value of his property and suffered a tax rate of only around 7%.

The company will receive a tax deduction for its contribution to the pension fund, greatly reducing its corporation tax liability.

Any further increases in value of the property will be sheltered from tax by the pension tax free status. Rents that the company pays to the pension will also be free from tax in the hands of the pension scheme.