For use by professional advisers and for information purposes only


  • David is a pharmacist who has managed a successful practice for over 10 years.
  • He now has an opportunity to open a second branch, and believes now is a good time to expand.
  • However, he wants to preserve his cash for business cash flow as much as possible. He would also like to minimise any bank’s influence over his business.


  • David has already negotiated the price for the premises down to £100,000.
  • To bring the premises up to the same standard as his existing practice will cost a further £25,000.
  • He has pension plans accumulated through the years from various sources worth £200,000.

The Solution

  • Subject to advice, David transfers his existing pensions to a SIPP.
  • The consolidated SIPP fund purchases the new practice premises at the market value of £100,000.
  • However, David is also aware that the £25,000 works still need to be covered.
    • The surveyor confirms that £10,000 of the costs relate to bringing the facilities up to a modern standard and would be considered as landlord works. This can be funded by his SIPP.
    • The additional £15,000 of fitting costs relate to adaptations specifically needed for a pharmacy. These cannot be covered by the SIPP, as they are deemed client-tailoring costs.
    • David, or his business, will need to fund the £15,000 tailoring costs.
    • As David is over 55, he crystallises £60,000 of his pension to release £15,000 tax-free cash needed to fund the £15,000 tailoring costs. Of course, he is not obliged to draw any income at this stage
  • David’s SIPP now owns his second branch. The premises are leased back to the business at the market value rent (£9,000 pa). He only had to fund £15,000 personally to complete the refurbishment (using his tax free cash). There is no bank involved in the financing and no personal guarantees.

Additional Benefits

  • The premises now held in the SIPP fund will attract no Capital Gains Tax if they are sold.
  • The rent now accumulates in the SIPP fund, free of income tax, and is available for investment.
  • The rental income does not impact on David’s annual contribution limit, so he is also free to make contributions each year up to the annual allowance.

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