sipp

Equity Release

Two directors of a company were looking for capital to help develop new products and move into emerging markets.

They had pension plans accumulated through the years from various sources worth £210,000 – while their company owned two light industrial units, together valued at £300,000.

First of all, they transferred their pension funds into @sipp plans. The @sipp trustee then borrowed £105,000 – providing enough funds to purchase the company’s units and meet the associated fees.

By doing this, the directors released £300,000 for the company to achieve their expansion plans, while the SIPP leased the units back to the company for £20,000 a year.

This rent is now being used to pay off the loan – with all the residual income going into the directors’ @sipp plans, free of income tax, and available for investment in other asset classes.

The directors can choose when the units are sold – and when they are, there won’t be any capital gains tax to pay. In the meantime, their funds will benefit from any capital growth.