SSAS Pension: What Happens If My Commercial Property is Opted to Tax for VAT?

What happens if the commercial property you want to buy into your SSAS is opted to tax for VAT?

This is not an uncommon question. A lot of commercial properties that are available for sale, or that perhaps you already own, are often opted to tax for VAT. Thankfully, a SSAS can buy a property that is opted to tax.

SSAS Property Purchase: Buying a Property Opted to Tax for VAT

The first step is to register the SSAS. Once the SSAS is registered, it can purchase the commercial property and it will not have to pay VAT on that purchase.

Purchasing a Property as a Transfer of Going Concern (TOGC)

The VAT process is not always straightforward. For example, if you are buying a commercial property with a pre-existing tenant and a pre-existing lease, this may be what’s known as a transfer of going concern. Therefore, the SSAS does not have to pay VAT on the property.

Purchasing a property as a transfer of going concern is quite a technical VAT issue. Therefore, we recommend you seek specialist advice. Please note, we can seek advice on your behalf and support you in this process.

Purchasing a Property Opted to Tax

If the property is opted to tax, please discuss this with us as we can get the answers you require. Book a call with a member of our SSAS administrator team to discuss this further.

Purchasing a Property Registered for VAT

If the SSAS is just registered for VAT, then you have to pay the VAT. That will be the purchase price of the property plus the VAT at 20%. So, you will have to factor that into your calculations.

How a SSAS Can Recover VAT Payments

When buying a property inside a SSAS, the VAT you pay can be recovered. To do this, we put a claim into HMRC on your behalf. Usually, within two to three months, the SSAS will be refunded the VAT.

If you’ve had to borrow the VAT money, we always suggest the SSAS borrowing the money from the sponsoring employer for a very short term loan. This lets you buy the property, pay the VAT, receive the VAT back into the SSAS and then repay the loan to the sponsoring employer. Discover the SSAS loanback rules.

If there isn’t enough money in the SSAS to cover the VAT, there are a number of other issues with regards to VAT and property. Again, VAT and property can be very complex, therefore we recommend that you speak with us so that we can support your property purchase and help the process go as smoothly as possible.

Book a Call with SSAS Provider One Crown Pensions

Book a call with a member of our SSAS practitioner team to discuss purchasing property inside a SSAS or visit our SSAS Video Hub to find out more.