Connected party transactions can be valuable in providing funding for small businesses. Iain Herbertson outlines what factors advisers need to make clients aware of.
Connected-party transactions in SIPPs have proven popular over the last few years as individuals look for greater interaction between their pension scheme and business. When the pension scheme enters into a transaction with either the member or their business, it normally involves the purchase or sale of an asset. Traditionally this would be a commercial property, which would be sold to the pension scheme and leased back to the business. This means the asset is held in a tax-efficient environment, benefiting from both future rental income and the release of cash into the business. ...
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