I have a limited company, and I’m looking to contribute to my pension fund and invest into buying a commercial property. Could you please let me know the options available? 

Arthur replies: 

A pension fund is allowed to invest into commercial property but not residential (for guidance, see HMRC’s Pensions Tax Manual at PTM121000). A sponsoring employer could rent a property owned by the pension scheme but would have to pay the commercial rent due. A shop with a wholly separate flat above is treated as two separate buildings. At PTM125200, HMRC explains the distinction between commercial and residential property. For example, a hotel is not classified as residential unless it provides accommodation rights such as timeshare. A pension scheme is allowed to borrow money up to the equivalent of 50% of the net value of the fund prior to the borrowing taking place (see PTM124000).