Tax implications of failing to pay rent on a property held in a SIPP

Using a Self Invested Personal Pension (SIPP) to hold commercial property which can be rented to your personal or family company can be beneficial. Instead of paying rent to a third party, it is paid into your pension scheme. The company is able to deduct the rent paid when calculating its taxable profits, but the SIPP does not pay tax on the rent, which builds up in the pension scheme, nor does it pay capital gains tax when the property is sold.

However, there are some downsides to be aware of, which can prove costly.