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Where Taxpayers and Advisers Meet

Moving land into a pension

Umar
Posts:67
Joined:Wed Aug 06, 2008 3:36 pm
Moving land into a pension

Postby Umar » Mon Aug 13, 2018 8:48 am

Hi

My mother wants to gift me some land, worth £50k.

I understand I can put this straight into my SIPP, and have two questions:

1. Do I get the income tax relief via a self-assessment?

2. If I get planning permission to build residential property on the land, I will need to move the property out of my SIPP.
When I move the land out, is the value of the land added to my income for that year?
So if my salary were £60k, in that year, my income tax would be based on £110k?
(If not, then how do HMRC claim the tax benefit I got back?)

Thanks

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Moving land into a pension

Postby AGoodman » Tue Aug 14, 2018 2:53 pm

This sounds very complicated for £50k, and it isn't clear to me exactly why you would want to do it. You will have to factor in the additional cost of advice/administration/compliance. I suppose it could avoid CGT on the planning gain.

I'm no expert so can't really answer your questions but somebody should point out that (a) you may well have to buy the land from the SIPP at market value if you want/need to withdraw it while under retirement age; and (b) the land with planning permission will be worth much more than £50k.

Umar
Posts:67
Joined:Wed Aug 06, 2008 3:36 pm

Re: Moving land into a pension

Postby Umar » Tue Aug 14, 2018 4:07 pm

It's worth doing to reduce 40% taxable income, and presumably the fund has to pay me for it now.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Moving land into a pension

Postby AGoodman » Thu Aug 16, 2018 6:42 pm

I suspect you have a choice - you can make a contribution and get tax relief, or you can sell it to the SIPP for cash and not get tax relief (because you have not make a contribution).

(A contribution may also involve a type of sale but your net cash position would not be improved)

What you can't do is sell it to your SIPP for cash and then also claim the tax relief against your other income.

Umar
Posts:67
Joined:Wed Aug 06, 2008 3:36 pm

Re: Moving land into a pension

Postby Umar » Thu Aug 16, 2018 8:49 pm

How do I get the tax relief if I gift it into the SIPP?

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Moving land into a pension

Postby AdamS93 » Fri Aug 17, 2018 8:50 am

Careful - value of land £50k, your annual allowance for pension contributions = £40k (maybe less or maybe more depending on your situation).

Therefore, you may be hit with an annual allowance charge if you put the land in to your pension.

If you withdraw from your pension early, there are all sorts of tax consequences. Why not keep the land outside the pension until you know whether you will get planning permission?

Get paid for tailored advice before you shoot yourself in th foot.

Umar
Posts:67
Joined:Wed Aug 06, 2008 3:36 pm

Re: Moving land into a pension

Postby Umar » Fri Aug 17, 2018 10:04 am

I have unused allowances so can move £50k.

How do I get the tax relief if I gift it into the SIPP? That's my basic question.

cliffordpope
Posts:84
Joined:Thu Jun 24, 2010 8:45 am

Re: Moving land into a pension

Postby cliffordpope » Thu Aug 23, 2018 8:01 am

Whoever uses the land (you?) will have to have a lease agreement with the pension provider and pay a market rent.


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