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Investing in a Pension or Buy to Let Property?

03rd October 2017

Planning for your future is important. In fact, making a plan for later life is becoming not only prudent, but essential. With government cuts to social care, increased cost of living, rising inflation and changes to the amount paid out from the basic state pension, getting old has suddenly become very expensive.

So, the question often asked is should I invest in a pension or buy an investment (Buy To Let property)?

Here, we lay out the benefits and risks associated with both pensions and buy-to-let properties.




• You receive tax relief on your contributions. This is a contribution from the government towards your pension contribution. The tax relief is paid out at your personal rate of income tax. There are limits to the amount you can pay in to the pension annually.
• The fund attracts significant tax advantages as it grows.
• You can take the pension from age 55 and take 25% of the pot as tax free cash.



• The pension fund may not perform as well as you had hoped as it is predominantly invested in the stock market in shares and the value is not guaranteed.
• You may want access to the whole pot when you retire and although this is possible it will attract a potentially large tax bill(after the 25% tax free cash).


Buy-to-let properties


• Investing in property can yield not only income but also capital growth.
• Interest rates on BTL mortgages are very low at present making the financing of the property attractive.



• Mortgage rates may increase in the future making the property less profitable.
• The tenant may not pay their rent.
• You may have to pay capital gains tax on any capital value increase.


If you’re still unsure about what direction to take, why not talk to a member of the IMC team today.

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