Dental Tribune UK Edition, October 25-3, 2010, No.26 Vol.4

P ensions are the future. There is no doubt that a wise saver will have con- sidered their future financial security and plan. This will also involve making sure they have sufficient assets in place to maintain their lifestyle through- out retirement. For those dentists with a secure, guaranteed NHS pension scheme, the assets cannot be accessed until you reach the age of 55. However, for those with private pensions, although the age to access the money stays the same, there is a great deal that you can do in the meantime. Control your future Pensions do not have to work hard for you just when you’ve retired. A well-implemented pension scheme can also provide the opportunity for a dentist to control their future now, manag- ing a portfolio of investments or even buying property. Pensions are not the first thought in many investor’s minds when they think of purchasing property. When it comes to tak- ing the plunge and securing your own practice, practitioners ei- ther buy the freehold or simply lease the premises. Buyers’ market? Arguably, there has never been a better time for practitioners to enter into the acquisition of com- mercial property. The financial sector is looking favourably on the dental market, while the new NHS contract is helping prac- titioners secure a more regular monthly income stream. Buying the freehold directly is only one of the options. Many practitioners are choosing to ex- plore another option: purchasing the property through a personal pension scheme. What are the advantages? While not for everyone, there are some definite advantages to buying commercial property through a Self-Invested Pension Plan (SIPP): • The purchaser avoids paying Capital Gains Tax (CGT) on the sale of the property. Although the rate of CGT has been lowered to 18 per cent, this is still a tax worth saving and there’s every possibility this will be raised at some point in the future, to bring it into line with the highest rate of tax at 50 per cent. • The pension fund can borrow against the security of the prop- erty. Many practitioners are able to purchase a freehold property with 100 per cent finance, as lenders consider the profession to be a reliable ‘safe lend’. How- ever, if a traditional mortgage is not available, for those who need to find a deposit before being able to access the capital, draw- ing from a pension fund can be an ideal solution. • VAT can be reclaimed if the property is VAT registered. Potential downfalls As well as the obvious benefits of this opportunity, it is also wise to point out the potential downfalls. Most pension funds are imple- mented for good reason, and the assets are usually invested with a fair degree of diversification of- ten combining a range of finan- cial options, including stocks and shares, bonds as well as cash. Therefore, investing wholly in just one asset class – commercial property – is considered to be a relatively high-risk strategy. Another disadvantage is that a SIPP containing a property is usually considerably more ex- pensive to run. It’s also worth pointing out that technically the investor does not own the prop- erty, it is owned by the pension fund/trustees and any rental in- come or capital receipts from the sale of the property cannot be re- moved from the fund until retire- ment age is reached – the mini- mum retirement age is now 55. Before making a decision on the most appropriate way to purchase a property, it is advis- able to seek professional advice. There are many pitfalls that can befall a practitioner when taking this big step, and professional as- sistance from the start can save thousands of pounds, as well as hours of time. DT Making your pension work Thomas Dickson explains just what’s involved in buying a freehold dental practice through your Self-Invested Pension Plan (SIPP) About the author Thomas Dickson, director of Essen- tial Money Limited, formerly a partner of Money4Dentists. For more informa- tion, and to receive a free copy of its Guide to Buying a Dental Practice, packed full of prac- tical hints and tips, contact Essential Money on 0121 685 5060, email tho- mas@essentialmoney.co.uk or visit www.essentialmoney.co.uk. ‘While not for everyone, there are some definite advantages to buying commercial property through a Self-Invested Pension Plan (SIPP):’ There are many pitfalls that can befall a practitioner when taking this big step October 25-31, 201016 Money Matters United Kingdom Edition CAD/CAM SYSTEMS | INSTRUMENTS | HYGIENE SYSTEMS TREATMENT CENTRES | IMAGING SYSTEMS Relaxed patients. Easy treatment. Improved post-operative healing. Is this all just wishful thinking? Actually, it’s stress-free – and at your fingertips. Both the SIROLaser Advance and the upgrade-ready SIROLaser Xtend offer you all the benefits of modern laser denitistry. For periodontology, endodontics, surgery … the list goes on! Enjoy every day. With Sirona. 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