Property pension

Several clients are considering transferring business property into SIPPS. In all cases the individuals personally own the business premises which they rent out to the respective companies of which they are the director/majority shareholder.

Suppose that the commercial property was worth £80 000.

I understand that this would be deemed to be an ‘in specie’ contribution for income tax purposes which HMRC would gross up to £100 000 by paying £20 000 to the pension scheme.

If the director/shareholder is a higher rate taxpayer he could then claim back an additional £20 000 through his tax return subject to him earning at least £100 000 also.

If his earnings were less than the market value at the time of the transfer then presumably income tax relief would be denied and just the market value of the asset at the date of transfer would be credited to...