Pension clients are rushing to complete any commercial property transactions ahead of the Budget for fear of increases in capital gains tax rates.
Providers and solicitors have seen a renewed urgency from Sipp and Ssas clients to get commercial property sales finalised in case CGT rates are increased in the upcoming Budget.
CGT is paid on the profit earned when selling a commercial property so clients want to push through sales now while they pay the current rate.
What is paid in CGT will depend on the investor's personal income tax rate.
Basic rate taxpayers will pay 10 per cent on commercial property, with 20 per cent being levied on higher rate, and additional rate taxpayers.
Nathan Bridgeman, director at SeaBridge Ssas, told FT Adviser he had seen a surge in clients who owned commercial property and land, either personally or through their limited company, bring forward completion dates to before October 30 in anticipation of a hike in CGT rates by the new Labour government.
He said: “A Ssas is effectively used as a family pension trust that shelters commercial property, land and other assets from CGT and IHT allowing assets to be passed tax efficiently to future generations.
“Substantial amounts of money can be saved by acting now and by paying potentially half the tax you will post October 30 on disposal of a commercial property or land.
“SeaBridge has seen a 60 per cent increase in connected party enquiries this third quarter from accountants and financial advisers with clients who own commercial property.”
It is rumoured Labour is looking to increase CGT in its first Budget to raise tax revenues - particularly in light of its commitment not to increase income tax, national insurance or VAT.
It is also expected that if any changes are made to CGT it will be implemented quickly.
Oliver Crichton, partner in the commercial real estate team at Birketts, said: “Potential increases to capital gains tax rates in the upcoming Budget on October 30 have resulted in enquiries in respect of 'connected parties' Ssas and Sipp commercial property transactions.
“The Sipp and Ssas rules allow for connected parties to sell commercial properties into their pension schemes at market value, although the property disposal is subject to capital gains tax at the point of sale.
“For pension investors to be sure that their transaction will proceed at current capital gains tax rates, it is important that action is taken quickly to ensure there is sufficient time for the sale to take place prior to October 30.”
amy.austin@ft.com
