{"id":35779,"date":"2025-08-01T13:24:25","date_gmt":"2025-08-01T12:24:25","guid":{"rendered":"https:\/\/www.langricks.com\/?p=35779"},"modified":"2025-08-01T13:24:25","modified_gmt":"2025-08-01T12:24:25","slug":"important-iht-changes-for-sme-owners","status":"publish","type":"post","link":"https:\/\/dev.withcreative.co.uk\/langricks\/important-iht-changes-for-sme-owners\/","title":{"rendered":"Important IHT Changes for SME Owners with Pension\u2011Held Properties"},"content":{"rendered":"

The government has reported upcoming substantial changes in <\/span>April 2027<\/b> that will significantly impact <\/span>business owners who hold commercial property within pension schemes<\/b> – particularly those using SIPPs or SSASs.<\/span><\/p>\n

Here’s what you need to know.<\/b><\/p>\n

Background<\/b><\/p>\n

Until now, it\u2019s been fairly common for SME owners to hold their business premises within a pension. It\u2019s often seen as a smart move – helping to fund retirement while still benefiting the business. The pension receives rental income from the company, and the business gains access to capital that would otherwise be tied up in property. What\u2019s more, on death, the property could usually be passed on free of inheritance tax (IHT).<\/span><\/p>\n

That\u2019s now about to change.<\/span><\/p>\n

With UK pension funds holding around <\/span>\u00a343 billion in commercial property<\/b>, the impact of this shift could be significant.<\/span><\/p>\n

So what\u2019s changing?<\/b><\/h3>\n

The government is planning to bring certain <\/span>unused pension benefits<\/b> into the scope of <\/span>inheritance tax<\/b>. Specifically, from <\/span>April 2027<\/b>, assets in a pension that haven\u2019t yet been accessed – including commercial property – could be treated as part of the member\u2019s estate and taxed at up to <\/span>40%<\/b> on death.<\/span><\/p>\n

This means that for SME owners who\u2019ve placed valuable commercial properties into SIPPs or SSASs, there could be a substantial and unexpected tax bill for their beneficiaries – wiping out one of the key advantages of using a pension to hold business property.<\/span><\/p>\n

How SMEs might be affected<\/b><\/h3>\n

If your business property is already held inside a SIPP or SSAS, or you’re planning to move into this structure, <\/span>new inheritance tax (IHT) rules<\/b> will apply starting in April 2027. These changes could complicate estate planning, especially for SME owners seeking to pass on their businesses or retain family control.<\/span><\/p>\n

 <\/p>\n

Key takeaways:<\/b><\/h3>\n
    \n
  1. Property in pensions may become IHT-affected<\/b>
    \n<\/b>From April 2027, commercial property within your pension may no longer be exempt from IHT, altering its appeal as a vehicle for intergenerational wealth transfer.<\/span><\/li>\n
  2. Business assets inside pensions may trigger taxation on death<\/b>
    \n<\/b>The new rules could change how such property is treated on your passing, potentially impacting your company’s succession or sale plan.<\/span><\/li>\n
  3. Review current pension\u2011held property structures early<\/b>
    \n<\/b>Now\u2019s the time to evaluate any property held within pension schemes to understand how these changes may affect company or family continuity strategies.<\/span><\/li>\n<\/ol>\n

    What business owners should do now<\/b><\/h3>\n

    You don\u2019t need to rush and do any immediate changes, but it might be effective to ask your accountant to conduct an early review<\/span><\/h4>\n