Guidance on Deferring or payment holidays on Commercial Property held within Pensions. (a view by AJ Bell)


Deferring Rental Payments

If the tenant is simply looking to defer the rental payment, with view of paying it back, then the product provider would generally need a comment from the accountant explaining what impact the current climate has had/will have on the business cash flow, and they also need to propose a definitive term for the deferral. The pension provider can revaluate at the end of this period if the current climate remains the same.

Writing Off The Rent For A Period

If the tenant is looking for a rental write off the Pension Provider would probably need to see management accounts to assess what other steps have or will be being taken i.e. other suppliers/dividends/staff also going unpaid.


With regards to loan repayments if borrowing has been taken to purchase a property, it will be down to the members themselves to negotiate any form of a holiday with the bank. Although the Pension provide can agree to a rent reduction, if a mortgage holiday cannot be agreed with the bank, they still need to ensure that the loan repayments can be made on an on-going basis. The members may therefore need to make the relevant funds available, either by way of a contribution, or by disinvesting from their funds and shares portfolio.

HMRC Extract of the Guidance issued in the Pension Schemes newsletter 118- March 2020

Rent And Loan Payment Holidays

As a result of coronavirus (COVID-19), we know that scheme administrators may be looking to provide increased numbers of payment holidays on loans due from connected parties and rents on commercial properties held in registered pension schemes.

Usually, to make sure that a payment holiday is on a commercial basis (and does not result in an unauthorised payment charge), HMRC would expect the scheme administrator to obtain an independent valuation.

To help scheme administrators and businesses affected by the current situation, HMRC are content that any arm’s length commercial decisions relating to registered pension schemes, including rent holidays, will not give rise to an unauthorised payment charge and can be agreed without independent valuations taking place.

During this difficult time please feel free to contact any of our advisers if you have concerns or any queries regarding a commercial property you hold in a Pension Plan/Scheme.

The contents of this article are for information purposes and the contents were accurate at the time of issue.

Publish date: 1st April 2020

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