There are advantages in holding the agricultural land personally in that Agricultural Relief may exempt the value of the land from the deceased’s estate on death and thus inheritance tax can be avoided. In this case the member was keen to get the land into his own name as quickly as possible but did not want to draw on the pension commencement lump sum (PCLS) from the equity portfolio as liquidation of it would have crystallised losses.
So instead it was possible to pay one half of the land value to him as his PCLS as an in specie payment, the land at that time being jointly held by the SSAS and the member. In subsequent years, additional tranches of land can be paid to him as net pension payments using the cash and recovering equity portfolio to cover the tax on the pension payments. The ownership of the land simply gradually moves from the SSAS to the member personally.
Individual circumstances will determine whether a Sipp or a SSAS might be the more suitable vehicle to hold property, but the SSAS does hold some aces up its sleeve.
Ian Stewart is joint managing director and pension consultant at Dentons Pension Management Ltd
