Property types and scenarios

VAT on SIPP and SSAS Commercial Property Purchases

PropertyVAT Team · Updated 21 October 2026 · 3 min read

Buying commercial premises through a SIPP or SSAS is a well-trodden route, particularly for business owners who want their trading company to rent from their own pension. The VAT rules are the same as for any other buyer. The practical constraints are not.

The basic position

If the seller has opted to tax, or the building is new, VAT at 20% is payable at completion. The scheme is the buyer, so the scheme pays it.

Recovery then depends on the scheme's own VAT position — not yours, and not your company's.

The registration question

A pension scheme is a separate entity. For it to recover the VAT on the purchase, it generally needs:

1. Its own VAT registration, and
2. Its own option to tax over the property, so that its rental supplies are taxable rather than exempt

Without both, the scheme is making exempt supplies of land and the VAT on the purchase is likely to be an unrecoverable cost to the fund. On a £600,000 premises purchase, that is £120,000 permanently lost from the pension.

This is the single most consequential point, and the one most often addressed late.

Who does what

Responsibility is split in a way that creates gaps:

The phrase to avoid is "I assumed the provider was handling it." Ask explicitly, early, and get the answer in writing.

The funding constraint

This is where pension purchases differ most from ordinary acquisitions.

A scheme can only spend what it holds, plus what it may permissibly borrow. Pension borrowing is subject to statutory limits, and borrowing to fund VAT generally counts towards them.

So a scheme with enough to buy the building may still not have enough to buy the building plus 20% plus stamp duty on the VAT-inclusive figure. The shortfall appears exactly where it is hardest to solve, because the scheme cannot simply draw on the member's personal resources.

Before committing to a VAT-affected purchase through a scheme:

• Confirm the total completion requirement, including SDLT on the VAT-inclusive consideration
• Confirm what the scheme holds in cash
• Confirm the scheme's remaining borrowing capacity
• Check with the administrator whether a VAT facility is permissible and how it counts

The tenant question

Where your trading company will occupy the premises, opting to tax has a consequence for it: the scheme charges VAT on the rent.

• If the trading company is fully taxable, that VAT is recoverable and the option is broadly neutral.
• If the trading company makes exempt supplies — some financial services, insurance, healthcare, education — the VAT on rent becomes a real ongoing cost.

That trade-off deserves analysis before the option is notified, because the option effectively locks in for 20 years.

Sequence

1. Establish the property's VAT position from the contract, in writing.
2. Confirm with the provider who registers the scheme and who notifies the option.
3. Start registration early — weeks, not days.
4. Model the full completion requirement, including SDLT on the VAT.
5. Check borrowing capacity before assuming the VAT can be funded.
6. Decide on the option to tax with advice, considering the tenant's VAT position.

This guide is general information, not tax, pension or financial advice. Pension property purchases are regulated and technical — take advice from your scheme administrator and a VAT adviser before committing.