Renting Commercial Property to Your Company Through Your SSAS

How Renting Commercial Property to Your Company Through SSAS Works

For many UK business owner-directors, the SSAS commercial property leaseback is the most powerful pension strategy they have never heard of. The concept is straightforward: your SSAS pension scheme purchases the commercial property where your business operates, and your company pays rent directly to the pension fund. Those rental payments are a deductible business expense, while the income compounds tax-free within the pension.

The result is a strategy that simultaneously reduces your corporation tax bill, builds pension wealth faster than conventional contributions alone, and gives your pension scheme a tangible asset with genuine investment merit.

The Tax Benefits Explained

The tax advantages of renting commercial property to your company through your SSAS are threefold:

1. Corporation Tax Deduction on Rent

Rent paid by your company to the SSAS is treated as an ordinary business expense for corporation tax purposes. At the current rate of 25% for companies with profits above £250,000, every £100,000 of annual rent saves £25,000 in corporation tax. Over a ten-year period, that is £250,000 of tax saved — capital that remains in the business to be reinvested or distributed more efficiently.

2. Tax-Free Growth Inside the SSAS

Rental income received by the SSAS is not subject to income tax. Capital gains on eventual property sale are not subject to capital gains tax. This tax-free compounding environment means that £100,000 of annual rent reinvested within the SSAS at 5% annual growth accumulates to approximately £1.26 million over ten years — compared to roughly £900,000 in a taxable environment.

3. Inheritance Tax Planning

Pension assets, including SSAS property, currently sit outside of your estate for inheritance tax purposes. From April 2027, pension assets will be included in the estate for IHT, but they may still benefit from business property relief depending on how the scheme is structured. Take advice on the evolving position.

"We regularly see business owners who have been paying rent to third-party landlords for decades suddenly realise they could have been building that same wealth inside their own pension. The leaseback conversation is often one of the most eye-opening we have." — Matt Lenzie, Former Banker & Corporate Finance Partner

HMRC Requirements for the Leaseback

HMRC permits the SSAS-to-company leaseback provided certain conditions are met. These requirements exist to ensure that the arrangement is genuinely commercial rather than a vehicle for extracting value from the pension on favourable terms.

Market Rent

The rent must reflect the open market value for the property. This must be supported by an independent RICS-qualified surveyor's valuation. The SSAS market rent requirements are non-negotiable — paying below-market rent is treated as an unauthorised benefit and triggers tax charges.

Formal Lease Agreement

A properly drafted commercial lease must be in place. This should be prepared by a solicitor and reflect the kind of terms you would expect in a lease between unrelated parties — including rent review provisions, repairing obligations, and break clauses. See our guide to SSAS lease terms for connected parties for the specifics.

Arms-Length Conduct

The lease must be conducted on arm's length terms throughout its life, not just at inception. If your company falls into rent arrears, the SSAS trustees must pursue enforcement action in the same way that a commercial landlord would. Allowing arrears to accumulate without action is a red flag for HMRC.

Step-by-Step: How to Set Up the Leaseback

Step 1: Establish or Confirm Your SSAS

You need an active SSAS in place before the property transaction can proceed. If you do not yet have one, you will need to establish the scheme and appoint a professional trustee and administrator. This typically takes four to eight weeks.

Step 2: Identify the Property

The most common scenario is the SSAS purchasing an existing property that the business already occupies — perhaps freehold premises you own personally or through the company. Alternatively, the SSAS may purchase a new commercial property for the business to occupy.

Step 3: Obtain an Independent Valuation

Commission a full RICS valuation of the property and a market rent assessment. Both are needed: the capital value to inform the purchase price (if buying from a connected party) and the market rent to set the lease terms.

Step 4: Arrange Finance if Needed

If the SSAS does not have sufficient funds to purchase the property outright, you can arrange SSAS property finance. SSAS schemes can borrow up to 50% of the net scheme assets. Use our SSAS mortgage calculator to model the numbers.

Step 5: Instruct Solicitors

Appoint solicitors to handle both the property acquisition and the lease. The lease should be drafted simultaneously with the purchase, so it is ready to complete as soon as the SSAS takes ownership.

Step 6: Trustee Approval

The SSAS trustees (which include the members) must formally approve the transaction. This approval should be documented in a trustee resolution.

Practical Considerations

What Happens if the Business Fails?

This is the question that gives some business owners pause. If the company ceases trading and can no longer pay rent, the SSAS — as landlord — would need to find a new tenant or sell the property. The pension fund does not simply absorb the loss on behalf of the employer. This is a genuine commercial risk that must be factored into the investment decision.

In practice, SSAS trustees often consider the financial strength of the employer before proceeding. If the company is financially robust and the property has good alternative use prospects, the risk is generally manageable.

Rent Reviews

Leases should include rent review provisions — typically upward-only reviews every three or five years. These ensure that the SSAS continues to receive market rent as property values rise, maintaining the arm's length character of the arrangement.

VAT

The SSAS may need to opt to tax the property, which means charging VAT on the rent. If the tenant company is VAT-registered, this is typically recoverable and creates no net cost, but it adds administrative complexity.

Benefits Beyond the Tax Savings

Read our dedicated piece on the benefits of the connected party SSAS lease for a deeper dive, but the headline advantages beyond tax include:

• Security of tenure for the business — you control the landlord
• Certainty over rent levels and lease terms
• The ability to invest pension contributions into a tangible, productive asset
• Potential for capital growth on top of rental income

Key Takeaways

• The SSAS leaseback allows your company to pay rent to your own pension fund
• Rent is tax-deductible for the company and grows tax-free in the SSAS
• HMRC requires market rent, a formal lease, and arm's length conduct throughout
• The SSAS can borrow up to 50% of net assets to fund the property purchase
• Professional legal, valuation, and financial advice is essential

Get Started

If you are interested in setting up a SSAS property leaseback, our team can guide you through every step of the process.

Contact us today for a no-obligation conversation, or explore our lender panel to understand the financing options available.