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SSAS (Small Self Administered Pension Scheme)

A SSAS is a Registered Pension Scheme individually approved by HMRC. They are governed by a Trust Deed & Rules and are a separate legal entity to the sponsoring employer.The Sponsoring Employer establishes the SSAS and invites members to join. Any individual employed by the Sponsoring Employer (or a participating employer) may join the Scheme. The members are all appointed as Trustees.

Establishment of a SSAS gives the following advantages:

Contributions

All contributions paid by the Company are deductable from pre-tax profits effectively reducing the Company's corporation tax liability. Any personal contributions paid by the members are relievable against income tax at the members highest marginal rate, subject to the maximum annual allowance.

Loans

A loan from the Scheme to the Sponsoring Employer is allowable, however they are subject to the following conditions. The loan should not exceed 50% of the market value of the Scheme's assets. The loan must be secured against assets of an equal value by way of a first charge. The term of the loan should be for no longer than five years Interest of at least 1% above Bank Base Rate must be paid. Loans may not be made to members of the scheme or anyone connected to a member.

Investments

The trustees of a SSAS can invest in a broad range of investments and enjoy tax free growth, some examples being:-

• Commercial property and land
• UK quoted shares, stocks, gilts and debentures
• Stocks and shares quoted on a recognised overseas stock exchange
• Futures and options quoted on a recognised stock exchange
• OEICs, unit and investment trusts
• Insurance company funds
• Bank and building society deposits
• Shares in the Sponsoring Employer

Shareholding in the Sponsoring Employer should not exceed 5%. Shares may also be bought in more than one sponsoring employer as long as the total holdings are less than 20% and shares in any one sponsoring employer are less than 5%.

If investments are made in taxable property, an unauthorised payment charge and a scheme sanction charge will apply. Capital gains can also apply on the sale of a taxable property.

Taxable property means investment in residential property and tangible moveable property, e.g. fine wines, vintage cars etc.

Borrowing

A SSAS may borrow to invest and to provide a member's benefit which has become payable. The maximum amount that can be borrowed is 50% of the net asset value of the scheme.

 

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Schemes with less than 12 members and where all decisions are made unanimously or have an independent trustee, are exempt from the trustees' knowledge and understanding requirements of the Pensions Act 2004 and the member-nominated trustee requirements. If every member of the scheme is a trustee, the scheme will also be exempt from the Internal Disputes Resolution Procedure requirements.

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