The Power of Pension Contributions: Tax Efficiency and Growth for Garden Centre Owners
For garden centre owners in the UK, pension contributions are more than just a way to save for retirement; they are also one of the most tax-efficient ways to build wealth and support your business. In this article, we’ll explore how pension contributions save both corporation tax and income tax, and how garden centre owners can take things a step further by using their pension funds to invest in property, such as buying a garden centre premises.
Pension Contributions: Double Tax Benefits
Making pension contributions from your company’s profits offers two key tax advantages:
Corporation Tax Savings
Pension contributions made by the company are treated as a deductible business expense, reducing the company’s taxable profits. For example, a £40,000 contribution could save £10,000 in corporation tax (at a 25% rate).
Income Tax Savings
By taking the money out of the company as pension contributions instead of dividends, you could be saving income tax up to 39.35%.
Example Calculation
Let’s look at a simple scenario for a garden centre owner in the 2025/26 tax year:
Description Amount
Company pension contribution £40,000
Corporation tax saving (25%) £10,000
Personal income tax due on equivalent salary (if paid as salary instead) £12,000 (at 30%)
By paying into a pension rather than extracting the same amount as salary, you’ve not only saved the company tax but also avoided personal income tax on that income.
How Can This Help Garden Centre Owners?
Combining Pension Funds to Purchase Property
Many garden centre owners don’t realise that pension funds can be combined to acquire commercial property, including the garden centre premises itself. This is typically done through a group Small Self-Administered Scheme (SSAS).
Key benefits of using a SSAS for property purchase:
- Multiple directors or family members can combine their pension pots, giving more purchasing power.
- The SSAS can purchase the garden centre premises, which can then be leased back to the trading business.
- The rent paid by the trading company to the SSAS is an allowable business expense (reducing corporation tax) while building pension wealth in a tax-free environment.
Tax-Free Growth Inside the Pension
All rental income and future capital gains within the SSAS are tax-free. This means the pension grows without the drag of income tax or corporation tax.
Example: Buying Your Garden Centre Premises
Scenario Amount
Purchase price of garden centre premises £400,000
Pension contributions from company (over time) £400,000
Rent paid by garden centre business to SSAS £30,000/year
Corporation tax saving on rent (25%) £7,500/year
Not only do you secure your trading premises within a pension, but you also reduce the trading company’s tax bill each year by treating the rent as a deductible expense.
Key Takeaways for Garden Centre Owners
- Pension contributions are a highly tax-efficient way to build wealth, saving both corporation tax for the company and income tax for you personally.
- A group SSAS can be a powerful tool, allowing you to combine pension funds to purchase your garden centre property.
- Rent paid to the SSAS is deductible for the business and grows tax-free within the pension, creating a win-win scenario.
Final Thoughts
Pension planning isn’t just for retirement—it can be an active strategy to reduce tax and invest in your business’s future. For garden centre owners, using pension funds to acquire and lease back your own premises is a smart way to keep more money in your business and build long-term financial security.
Speak to one of our expert tax advisers at Dragon Argent for a confidential consultation and discover how we can help you protect and grow your assets.