Tom Selby responds to a small business owner considering using his SIPP to upgrade his business premises
Thursday 10 Oct 2019 Author: Tom Selby

I am a small business owner with a SIPP worth just under £300,000. I’m currently looking to expand into larger premises and was told I can potentially use some or all of my fund to buy commercial property. What are the risks and is it something I should consider?


Tom Selby, AJ Bell  Senior Analyst says:

You can invest in commercial property via your SIPP, but there are strict rules governing how this can be done. Investing in residential property is not permitted under HMRC rules.

Investing in commercial property can be quite a complex process with significant costs and risks involved, so speaking to a regulated financial adviser is an absolute must. The below should therefore be viewed as a basic introduction only.


Investing in commercial property might be attractive to self-employed investors who want to use their SIPP to help buy their business premises.

For those looking for indirect exposure to commercial property, there are various funds and trusts in which you can invest on an advised or non-advised basis.

If you invest directly in commercial property through your SIPP, you can borrow up to 50% of the value of your plan to help buy the property. It is also possible to pool your SIPP with those of other SIPP investors.

When you use SIPP funds to purchase commercial property to be used as your own business premises, you’ll be required to pay rent at a commercial rate to the SIPP. This rent will be an allowable business expense and so could reduce your corporation tax bill.


There are a number of risks your adviser will talk you through if you are considering using your pension to invest directly in commercial property.

One of the central tenets of retirement investing is diversification. By investing in a commercial property linked to your business, you are tying your retirement fortunes to the performance of that business (through the rent you receive) and the property market.

If the business struggles or the property market tanks, your retirement plans could be in trouble as well. Given the size of your fund, there’s a decent chance you’ll need to use the majority – if not all – of it to pay for a commercial property, so your exposure will be significant.

In addition, because commercial property is a specialist area there are likely to be extra fees involved. As well as paying a financial adviser, you will also need to cover costs of professional services, such as legal advice and valuation, as well as ongoing property management.

In summary, using your SIPP to invest in your own business premises is legitimate but there are risks involved which should not to be taken lightly.


Send an email to with the words ‘Retirement question’ in the subject line. We’ll do our best to respond in a future edition of Shares.

Please note, we only provide guidance and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.

‹ Previous2019-10-10Next ›