Why Sell Your Premises to Your SIPP?
Selling your business premises to your SIPP is one of the most powerful tax-planning moves available to a UK business owner who holds their own commercial property. The transaction typically allows you to: extract capital from the business in a tax-efficient way, shelter future rental income from income tax, build your pension fund using property you already know, and continue occupying the property as a tenant with deductible rent costs.
The transaction is entirely legal under HMRC rules, provided it is carried out at open market value with full documentation. Because the SIPP is buying from a connected party (you or your business), additional compliance steps apply — but these are well-established and manageable with the right professional support.
Step 1: Establish the Market Value
Before any other steps are taken, you need an independent RICS valuation of the property at its open market value. This is the price the SIPP will pay — it cannot be set above or below market value. Commission a RICS-registered valuer with no connection to you, your business, or your SIPP provider. Allow two to four weeks for the valuation to be completed and the report issued.
Once you have the valuation, check that your SIPP has sufficient funds to complete the purchase — either from existing cash in the fund, planned contributions, or a SIPP mortgage. Our SIPP LTV Calculator can help you model the borrowing required alongside your existing fund value.
Step 2: Notify Your SIPP Provider
Contact your SIPP provider early — before instructing solicitors — to confirm that they are willing to proceed with the connected party purchase and to understand their specific requirements. Not all providers accept connected party property transactions, and those that do will have their own checklists and timelines.
Your provider will typically require: the RICS valuation report, evidence of the source of funds for the purchase, confirmation of the proposed lease terms, and your solicitor's details. Some providers also require their own legal team to review the title and lease, which adds time and cost to the transaction.
Step 3: Instruct Solicitors
Both the SIPP (as buyer) and your business or you personally (as seller) must be independently legally represented. Using the same solicitor for both sides of the transaction is not acceptable — the conflict of interest would undermine the arm's-length nature of the transaction that HMRC requires.
The solicitors will carry out standard commercial property conveyancing: searches, title review, enquiries, and drafting of the transfer documents. They will also draft the lease between the SIPP (landlord) and your business (tenant) for simultaneous completion with the property sale. The lease must be finalised and approved by your SIPP provider before completion.
Step 4: Arrange the Finance
If the SIPP does not have sufficient cash to fund the purchase outright, a SIPP mortgage can be arranged for up to 50% of the net asset value of the SIPP. This limit is set by HMRC and applies to borrowing across all assets in the scheme, not just the property being purchased. The mortgage must be secured on the SIPP's assets and obtained on commercial terms from an arm's-length lender.
In practice, arranging a SIPP mortgage for a connected party property purchase requires a specialist lender. We can assist with sourcing appropriate finance through our lender panel. Use our SIPP Mortgage Calculator to model the repayment costs and their impact on the pension fund.
Step 5: Complete and Set Up the Lease
Completion of the property purchase and execution of the lease typically happen simultaneously. On the day of completion, the SIPP's funds (plus any mortgage proceeds) are transferred to the seller, legal title passes to the SIPP, and the lease between the SIPP and your business takes effect.
From this point, your business pays rent to the SIPP on the agreed terms. The rent must be paid punctually on the dates specified in the lease — late payment by a connected party tenant is a serious compliance risk. Set up a standing order or direct debit to ensure payments are made on time each month or quarter.
Retain all transaction documents — the RICS valuation, the transfer deed, the lease, and any SIPP provider correspondence — in a permanent compliance file. These records may be needed years later if HMRC enquires into the pension scheme.
Tax Implications of the Sale
The sale of your business premises to your SIPP is a disposal for capital gains tax (CGT) purposes. If the property has appreciated in value since it was acquired, you or your business will have a CGT liability on the gain. The SIPP does not pay CGT — the liability falls on the seller. Business Asset Disposal Relief (formerly Entrepreneurs' Relief) may be available in some circumstances to reduce the CGT rate, but this requires specialist tax advice.
Stamp Duty Land Tax (SDLT) is also payable by the SIPP on the purchase. SDLT rates for commercial property start at 0% up to £150,000, 2% from £150,001 to £250,000, and 5% above £250,000 (as at 2024). Your solicitor will handle the SDLT return and payment.
Despite these transaction costs, the long-term tax benefits of holding the property within the SIPP — tax-free rental income, tax-free capital growth, and the deductibility of rent by the business — typically outweigh the upfront costs for properties held over a meaningful period.