Property investment will flow into Sipps as a result of the Government’s move to align stamp duty on commercial property with residential, providers say.
In this week’s Budget the Chancellor unveiled reforms that remove the ‘slab’ structure and replaced it with a with a system more akin to income tax, costing the Treasury £2.6bn.
From Thursday commercial stamp duty has a zero rate band on purchases up to £150,000; a 2 per cent rate on the next £100,000; and a 5 per cent top rate above £250,000. There will also be a 2 per cent rate for those high value leases with a net present value above £5m.
Suffolk Life head of marketing Greg Kingston says the Budget was “one of the most positive for Sipps since they were created”.
He says: “A Sipp investor would have paid £8,250 in stamp duty land tax to purchase a £275,000 commercial property – after the Budget announcement that cost will fall to £3,250, a saving of £5,000.
“The lowering of cost to buy a commercial property with a Sipp is very welcome, and should raise awareness of the opportunity amongst investors. Industry figures suggest that fewer than three per cent of all commercial property transactions are made by Sipps – this figure should now start to grow following this Budget.”
AJ Bell technical resources consultant Charlene Edwards says: “We expect to see renewed interest in commercial property as a Sipp and SSAS investment off the back of the savings to purchasers who may be looking for a new home for cash held within their schemes.“