Time Running Out for Swallowfield Tax-Break Buyers

An exciting new office development in Oldbury will provide an opportunity for company directors to boost their pension plans.

But time is running out for owner-managers to buy units at Swallowfield Courtyard before the current tax benefits in Self-Invested Pension Plan schemes (SIPPs) end.

That’s the advice of Jason Adderley, Business Development Manager for Birmingham-based Stoford Developments, which has been developing the high-profile gateway office accommodation complex beside the M5 at Birchley Island.

Adjacent to the Centrica headquarters building, the scheme offers a range of freehold office space from 2,000 sq ft to 6,000 sq ft.

Jason said that buyers looking for a prime office property should take advantage of Swallowfield Courtyard before the borrowing rules change in April 2006.

Currently an SIPP can borrow up to 75 per cent of the property value. So a company buying a 3,000 sq ft unit at Swallowfield Courtyard for £450,000 would need only a £112,500 pension fund deposit, with the trustees able to borrow the rest.

From April 2006 pension trustees will only be able to borrow 50 per cent of the fund value not 50% of the property value. So, if the borrower had a fund value of£300,000, this would allow the SIPP trustees to borrow half that amount -£150,000 giving the required £450,000. The new rules will therefore require a significantly higher contribution from the member to purchase the same property.

Jason added: “The SIPP is an extremely tax-efficient means for an owner-managed company or a partnership to purchase business premises because the rent - which attracts tax relief – is paid directly into the pension fund rather than to a landlord.

“While gaining independent advice is a must, it is clear that Swallowfield Courtyard offers one of the final opportunities to take advantage of the current rules.”
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