Independent Red Book valuations of commercial property held within SIPP and SSAS pension schemes: for acquisition, connected-party purchases and rents, borrowing, in-specie transfer, scheme accounts and pension sharing, prepared for trustees and scheme administrators who need a figure they can rely on.
A pension scheme that owns commercial property needs that property valued by an independent RICS Registered Valuer at several points in its life. The valuation is not a formality. It sets the price the scheme can pay or accept, governs the scheme’s reporting, and keeps the arrangement on the right side of HMRC’s connected-party rules. We prepare those valuations on a genuinely independent basis, report in accordance with the RICS Red Book, and liaise directly with trustees, administrators and advisers so the figure does its job without friction.
We act on the full range of property a scheme is permitted to hold: offices, industrial and warehouse units, trade counters, retail premises and the freehold of owner-occupied business premises, across London, the South East and UK-wide on instruction.
When a scheme buys a property, the trustees need an independent valuation to confirm that the price is at arm’s length, and the point bites hardest where the seller is the member, their business or another connected party. If the scheme pays more than the property is worth, value has moved out of the fund and into the seller’s hands, and s.174 of the Finance Act 2004 treats that shift as an unauthorised payment to the member. The same rule runs in the other direction on a sale out of the scheme at an undervalue, and s.181 does the equivalent job where a sponsoring employer is on the other side of the deal. We provide a Market Value (VPS 4) opinion on the acquisition and, where the purchase is part funded by borrowing, report the figures the lender and the scheme administrator will rely on.
Borrowing is where the valuation does a second job. Under s.182 a registered pension scheme may borrow for a money purchase arrangement only where the total of existing and proposed borrowing is no more than half the value of the assets held for that arrangement. The test is pure arithmetic and the property is usually the largest figure in it, so the valuation sets the ceiling on what the scheme can borrow to complete. Where the sums are close to the limit, it is worth establishing the value before terms are agreed rather than after.
A pension scheme is not free to buy whatever property it likes. Under s.174A and Schedule 29A of the Finance Act 2004, an investment-regulated scheme that acquires an interest in taxable property is treated as making an unauthorised payment, and taxable property means residential property and tangible moveable property. Residential property is defined at paragraph 7 as a building used or suitable for use as a dwelling, together with associated land, and it reaches hotel accommodation and beach huts wherever in the world they stand. Paragraph 8 carves out buildings used as children’s homes, halls of residence for students, care homes, hospitals and hospices, and prisons. Paragraph 10 carves out accommodation occupied by an employee who is not connected with the scheme and who is required to live there for the job.
The difficulty in practice is mixed use. A shop with a flat above it, a yard with a cottage on it, an office building with a residential upper part: the residential element is capable of tainting the acquisition, and converting or adapting a non-residential building so that it becomes residential is itself a trigger under s.174A. We raise it at inspection rather than after exchange. Whether a particular structure works is a question for the scheme administrator and the client’s tax adviser; our job is to describe the property accurately and value the parts. If you are weighing up the structure itself, I have written a fuller guide to how a SIPP or SSAS can buy commercial property.
Two definitions are in play and they have to line up. HMRC’s is statutory: s.278 of the Finance Act 2004 provides that the market value of an asset held for the purposes of a pension scheme is determined in accordance with s.272 TCGA 1992, which is the price the asset might reasonably be expected to fetch on a sale in the open market. Ours is the Red Book’s: Market Value under VPS 4, the estimated amount for which the asset should exchange between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, both parties acting knowledgeably, prudently and without compulsion. The two tests point at the same number, but only where the report is built on evidence rather than on the figure the parties would prefer. Where the property is let, or is about to be let to a connected tenant, the scheme needs Market Rent as well, which is a separate exercise on separate evidence.
Independence is what makes any of it useful. A valuation prepared by the member, the member’s agent, or the adviser who introduced the transaction is worth very little to a trustee who may have to justify the price to HMRC years later. Every valuation here is carried out by a RICS Registered Valuer in accordance with the RICS Valuation – Global Standards (January 2025 edition) and the UK National Supplement, and we do not act for the member in the transaction we are valuing.
The charges are heavy enough to be worth stating plainly. An unauthorised payment attracts the unauthorised payments charge under s.208 at 40% of the amount, payable by the member. Where unauthorised payments reach 25% of the member’s rights under the scheme within a twelve-month period, the s.209 surcharge adds a further 15%, taking the member’s exposure to 55%. Separately, the scheme administrator faces the scheme sanction charge under ss.239 to 241 at 40% of the scheme chargeable payment, reduced by a credit for the unauthorised payments charge actually paid, but never below 15%.
Those percentages apply to the whole of the excess, not to some smaller measure of the mistake, and they fall on the member and the administrator rather than on whoever produced the figure. That is why a trustee asks for a valuation rather than an opinion, and why the report needs to show its working. A number that cannot be reconstructed from the comparables set out in the report is not much help in an enquiry three years later.
Where the scheme lets its property to the member’s own business, the rent has to be at full open market value throughout, not merely at the start. The value shifting rules apply here too. Rent set below market leaves value with the tenant that belongs to the fund; rent set above market moves value into the fund in a way that can be treated as something other than rent. Both directions are capable of producing an unauthorised payment, so the safe course is an evidenced Market Rent at grant and at every review.
The lease also has to work as a lease. A connected-party letting on an undocumented or long-lapsed arrangement gives the trustees nothing to point at, and a review date that passes unactioned leaves the fund receiving less than it should for the rest of the period. We prepare the Market Rent opinion and, where the review is contentious or the evidence is thin, run it exactly as we would any other commercial rent review.
A good deal of published guidance asserts that HMRC requires a valuation every three years. It does not. For ordinary commercial property there is no statutory revaluation interval. The three-year cycle is a scheme administrator convention, and a sensible one, because it keeps member statements and scheme accounts honest without generating fees for no reason. What is not optional is a valuation at the events that engage the tax rules, or that fix a number somebody else will rely on:
Between those events a desktop update is usually enough, and we are happy to provide one where a scheme holds property over the long term. A desktop update is not a substitute for a full valuation at a point where the figure has to carry weight.
A SSAS is an occupational scheme, and where it prepares scheme accounts its investments are carried at fair value at the scheme year end, under FRS 102 and the pensions SORP. That SORP has changed. PRAG published Financial Reports of Pension Schemes 2026 on 9 March 2026, the first substantial revision since 2018, and it is required for accounting periods beginning on or after 1 January 2026, so for most schemes the first affected year end is 31 December 2026 or 31 March 2027. The direction of travel is more disclosure rather than less, and directly held property is the asset most likely to attract a question about how the figure was arrived at.
In practical terms that means the valuation the auditor sees should be dated at or close to the year end, prepared on a stated basis, and reconcilable with the one before it. Where a scheme has valued the same property through three different firms in six years and the numbers wander, the wandering is what gets asked about. This section is current as at August 2026; we will say so here when the position changes.
Property can be moved between schemes in specie rather than sold for cash, and it can change hands on divorce, on a member leaving, or on wind-up. Each of those needs an independent value as at the relevant date, and each engages the connected-party rules. We value for in-specie transfers, for pension sharing, and on the restructuring or wind-up of a scheme, working alongside the administrator and the client’s tax adviser so the basis is right before the figure is relied on.
One distinction is worth drawing, because it is regularly blurred. Moving a property between registered schemes in specie is routine. Contributing a property to a scheme in specie is a different question and a harder one: in HMRC v Sippchoice Ltd [2020] UKUT 149 (TCC) the Upper Tribunal held that ‘contributions paid’ in s.188(1) of the Finance Act 2004 means payments of money, so a transfer of assets in satisfaction of a money debt did not qualify for relief. Whether relief is available on a proposed in-specie contribution is a matter for the client’s tax adviser and the scheme administrator, not for the valuer. Our part is unchanged either way: the property still needs an independent value at the relevant date, and that value is what the rest of the argument is built on.
A pension sharing order under s.29 of the Welfare Reform and Pensions Act 1999 splits the member’s rights by percentage, and that percentage is applied to the cash equivalent as at the valuation day defined by s.29(7), with the Pension Sharing (Valuation) Regulations 2000 governing how the cash equivalent is worked out. For a money purchase arrangement whose principal asset is a single commercial property, the cash equivalent is in substance that property’s value net of scheme liabilities, so the valuation decides how much leaves the fund. Both sides’ solicitors will read it, and we prepare valuations for pension sharing on the footing that we may be asked to explain the figure rather than simply to state it.
Every valuation is carried out by a RICS Registered Valuer and is independent of the member, the scheme and any introducing adviser, which is precisely what makes it useful to a trustee. We turn instructions around to the timetable the transaction actually needs, agree fees in advance, and are happy to provide periodic desktop updates between full reassessments where a scheme holds property over the long term. Where a scheme holds several properties we can value the portfolio together while reporting each asset transparently, which keeps the accounts and the member statements consistent.
There is no statutory revaluation interval for ordinary commercial property. The familiar three-year cycle is a scheme administrator convention rather than an HMRC rule. What does force a fresh valuation are the events: an acquisition or disposal involving a connected party, an in-specie transfer, a lease or rent review with a connected tenant, borrowing, pension sharing on divorce, death, a benefit calculation, and the scheme year end where the accounts require it.
Because much of what a scheme does with property happens between connected parties: the member, their business, the scheme. HMRC needs comfort that those transactions are at open market value. A valuation by an independent RICS Registered Valuer who is not the member or their adviser is what provides that comfort.
It must be at full open market rental value, evidenced independently. If the rent is below market, HMRC can treat the shortfall as a contribution; if it is above market, it can be an unauthorised payment. We provide the open market rent opinion that keeps the connected-party letting compliant.
It is the contribution or transfer of the property itself, rather than cash, into or between pension schemes. Each leg needs an independent value as at the relevant date. We prepare those valuations and work alongside your administrator and tax counsel on the basis required.
Not without care. Residential property is taxable property under s.174A and Schedule 29A of the Finance Act 2004, and acquiring an interest in it is treated as an unauthorised payment. Schedule 29A carves out care homes, hospitals and hospices, halls of residence, children’s homes and prisons, and job-related accommodation for an unconnected employee, but a flat over a shop is none of those. Converting a commercial building into residential is a trigger in its own right. Whether a structure works is for the administrator and your tax adviser; we describe the property accurately and value the parts so the question can be answered before exchange.
The excess is treated as an unauthorised payment. The member pays the unauthorised payments charge at 40% under s.208 of the Finance Act 2004, plus a further 15% surcharge under s.209 where unauthorised payments reach a quarter of their rights in a twelve-month period, so up to 55%. The scheme administrator faces a separate scheme sanction charge under ss.239 to 241, at 40% reduced by a credit for the charge the member has paid but never below 15%. The percentages bite on the whole of the excess, which is why the valuation is worth doing properly.
Market value, as defined for pension purposes by s.278 of the Finance Act 2004, which adopts s.272 TCGA 1992: the price the asset might reasonably be expected to fetch on a sale in the open market. That maps onto the Market Value basis at VPS 4 of the RICS Valuation – Global Standards, so a Red Book report speaks to the standard HMRC applies. Where the property is let to a connected party, Market Rent is a separate opinion on separate evidence.
Greater London and the South East as standard, and the rest of the UK on instruction. For schemes holding several properties we can value a portfolio together while reporting each asset transparently.
