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Does the New IHT on Pensions Signal the End of Commercial Property Purchase via SSASs and SIPPs?

Journalist: Scott Gallacher, Newspage Newsdesk

ended 10. June 2025

From April 2027, unused pension funds—including those in SSASs and SIPPs—will be included in the estate for Inheritance Tax (IHT). This is a major shift from the current rules, where defined contribution pensions sit outside the estate and can pass on IHT-free. Does this mean the end of the once-popular strategy of buying commercial property through pensions? And by extension, a major blow to the future of SSASs and SIPPs?

For many business owners, the appeal was clear:

  • Tax-free rental income into the pension
  • No Capital Gains Tax on sale
  • IHT-free transfer on death

But with that final benefit set to vanish, the equation changes.

Compare this to holding premises in the trading company itself, where Business Property Relief (BPR) can reduce the IHT liability to zero. For many, this could now be the more efficient route.

So—is this the beginning of the end for commercial property in pensions? And what might this mean for the future value of pension providers built on property-focused SSAS/SIPP structures?

IFA thoughts? Would love to hear how you're approaching this with clients.

5 responses from the Newspage community

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Editor
Scott GallacherVerified
Director at Rowley Turton
This is just one of many planning shifts triggered by Labour’s IHT raid on pensions. While SIPP and SSAS providers may enjoy a short-term uptick in advice fees, the long-term picture looks far less rosy. Stripping out a key IHT benefit could hit demand—and by extension, raise serious questions about the future value of pension firms like Mattioli Woods that are heavily exposed to these structures.
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Rob MansfieldVerified
Independent Financial Advisor at Rootes Wealth Management
Property in pensions has always been an uneasy fit. What makes sense at the time of the purchase can lead to problems when someone wants to take the money out. You can't sell a room or a floor, the whole building has to be sold. If the market is poor when you come to sell that can be a problem. The change in inheritance tax treatment adds another layer of complexity because none of us know when we're going to die and so if there is a tax bill to pay, a quick sell might not be in your family's best interests.
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Faisal SheikhVerified
Managing Director at Monmouth Capital
I am probably a lone voice in my industry in saying this: pensions should be subject to Inheritance Tax, and I applaud Rachel Reeves for correcting the decision to exempt them from IHT in 2015. The fact that business owners could use their pension to buy their own commercial property, pay no tax on rental income, no CGT on sale and/or no IHT on leaving it to their inheritors should be looked at as a perfect example of why the tax code needs to be ripped up and rewritten from scratch. I don't see the closure of this wheeze as a negative, for society at large. Pensions are meant to fund your retirement – not to be an estate planning tool. If you are fortunate enough to have so many surplus assets that you didn’t need your pension in your lifetime, congratulations. The pot that’s left over is part of your estate. Whether IHT or how it is implemented in the UK is fair or effective is a separate question.
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David StirlingVerified
Independent Financial Adviser at Mint Wealth
This isn’t necessarily the end of SSASs/SIPPs for property, but more of a realignment. For retirement planning and active business use, they will still have advantages, however their role in succession planning and wealth preservation is under threat. As one loophole closes, another opens, and the wealthy can start moving towards trusts and Family Investment Companies for their inter-generational planning.
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Kundan BhaduriVerified
Entrepreneur, Investor and Landlord at The Kushman Group
From April 2027, unused funds in SSAS and SIPP will be lumped into your estate for IHT effectively gutting the most powerful reason entrepreneurs bought commercial property through pensions in the first place. For decades, we’ve parked our premises in pensions to enjoy tax-free rental income, zero Capital Gains Tax on sale, and crucially, IHT-free legacy transfers. With that last pillar knocked out, the entire strategy looks like it’s heading for a slow, bureaucratic burial. Suddenly, holding the property in a trading company where Business Property Relief can chop IHT down to zero starts to look like the clever play again. It’s another example of a government obsessed with punishing prudence and taxing aspiration. Pension providers who built their empires on SSAS and SIPP property portfolios must be reaching for the defibrillator. Once again, we’re told to save, plan, invest—until doing so becomes yet another taxable event. You couldn’t design more anti-enterprise policy if you tried.