Land boost to SIPPs
Land boost to SIPPs
FARMERS planning to take on more land should consider using a pension fund as a tax-efficient method of funding the expansion.
Mike Butler, director of rural services at Tenon Group, believes many producers are unaware that farmland and buildings can be held as part of a self-invested personal pension (SIPP). He believes the option has a number of advantages over conventional pension plans.
"Capital is the one thing that a lot of businesses are short of and farmers are often reluctant to take on extra loans from the banks. An alternative source is to utilise monies already accumulated in pension funds. Sometimes the funds invested can be significant and the transfer value into a SIPP may be enough to buy the required land outright."
Even if money has to be borrowed to finance the purchase, it makes sense to borrow it through a SIPP and use rental payments to pay the interest, says Mr Butler.
But one of the biggest benefits of keeping land in a SIPP is that any increase in value is exempt from taxation, he adds.
SIPPs are not complicated and can be started for as little as £1000, with annual running costs as low as £200, he says. *