A SSAS pension is an occupational scheme that provides its Members with real control over SSAS held assets. Regulated by The Pensions Regulator (TPR) and registered directly with HMRC, SSAS is designed for Directors of trading Limited Companies.
SSAS pensions are usually set up by Directors as means to control Corporation Tax, eliminate Capital Gains Tax, invest free from tax and to provide a pension for themselves (and usually their family) at retirement.
What Does SSAS Stand for?
SSAS stands for Small Self-Administered Scheme. If you are running a trading Limited Company in the UK today, you should consider having a SSAS attached to your business. A SSAS offers significant benefits over other pension schemes if you have a Limited Company (here’s an example).
The Benefits of a SSAS Pension
SSAS offers significant benefits to Directors of Limited Companies, such as the opportunity to:
- Grow Family Wealth
- Support your Company
- Protect your Legacy
- Reduce your Tax
- Diversify your Investments
- Secure your Retirement
The key benefit is that you, as the Director, have control. You grow the fund. You determine who its members shall be. This is one of the major benefits of SSAS; it puts you in charge of your financial future and offers full transparency around your retirement savings.
Is SSAS a Regulated Pension Scheme?
SSAS pension schemes are regulated by The Pensions Regulator and officially registered with HMRC. The rules governing SSAS pensions are complex and failure to comply can result in penalties. Therefore, it is essential to choose a practitioner who can provide guidance and ensure the scheme doesn’t fall foul of the rules.
For example, a SSAS is required to make yearly submissions to both HMRC and The Pensions Regulator, something that we at One Crown Pensions can prepare for you.
Who are the Members of a SSAS?
A SSAS can hold up to 11 members. While it is possible to include Company staff and members of a wider family, SSAS Members generally prefer to include only immediate family and/or beneficiaries, making it easier to cascade wealth and agree on investments and strategy.
If your Company has Directors that are not immediate family, it is recommended that they set up a separate SSAS(s), sponsored by the same (or another) Company.
Can I Add Children Into a SSAS?
You can make your children Members of the SSAS, once they have reached the age of 18. They do not have to be employed by the sponsoring employer to become a member of the SSAS, you can just include them.
There is no requirement for children to make contributions into the SSAS. However, if the children are employees of the Company, then the Company can make contributions on their behalf.
Advantages That Set SSAS Apart
While SSAS pensions work in a similar way to other defined contribution pension schemes, there are some differences that set SSAS apart:
Control
SSAS Members have a high degree of control over scheme investments. This allows for bespoke investment strategies with the ability to yield better returns than traditional pension schemes. Feel free to speak to one of our friendly consultants at One Crown Investments for more information.
Investments
Investments within SSAS grow tax-free. From commercial property investments to Fixed Income Bonds paying up to 17% for a 12 month term. Some can even be compounded. Please speak to our sister Company, One Crown Investments, for more information.
Loan Back to the Company
Under certain circumstances and with proper adherence to regulations, SSAS pensions are able to make loans to the sponsoring Company. This can provide your business with a vital source of capital without the need for bank borrowing.
Commercial Property Purchase
SSAS schemes are eligible to invest in Commercial Property, offering the opportunity to grow wealth tax free, through property ownership and benefitting from rental income. For maximum tax efficiency, SSAS schemes are able to buy commercial property from your Limited Company, moving the property from a taxed environment to a tax free environment.
Making Contributions to a SSAS Pension Scheme
Once the SSAS has been established and registered with HMRC, Members can transfer other existing pensions into the SSAS and make contributions from the sponsoring employer.
Sponsoring employers, SSAS Members and even third parties can make contributions into the SSAS. It’s important to note that third party contributions are considered the same as Member contributions and, therefore, can be paid on either a regular or one-off basis.
Learn More About SSAS Contributions.
What is My Value in the SSAS?
The value of a Member’s share in the SSAS fund will depend on the following: the contributions and transfers they’ve made, their share of investments, and any payments made from the SSAS on their behalf (lump sum payments and partial transfers).
Members share in the overall performance of investments in the SSAS fund, with each individual Member owning a certain percentage of the entire SSAS. Alternatively, each Member’s share of the SSAS can be linked to the performance of particular investments. However, this requires prior agreement from all Members.
The benefit amount an individual Member can withdraw from the SSAS depends on the value of their share of the SSAS fund at the exact time they decide to take benefits from the SSAS. Here at One Crown Pensions, we can advise you of the value of each Member’s percentage share of the SSAS within each Member’s Annual Statement.
SSAS and Tax Relief Benefits
For Company Directors, a SSAS Pension is a key building block to growing and protecting long-term wealth. Discover the tax benefits.
Capital Gains Tax
The joys of having funds inside a SSAS is that they are exempt from a number of different taxes. If you invest money and that growth is statutorily exempt from Capital Gains Tax, this could make a big difference. A lot of Capital Gains Tax allowances have been reduced or removed completely, so having somewhere that you don’t pay Capital Gains Tax is vital.
Inheritance Tax
All SSASs are exempt from Inheritance Tax until April 2027.
Spouse/Partners
Adding a spouse or partner as a Member provides additional tax efficiencies, with both sets of allowances able to be maximised and benefitted from. Here’s an example.
Corporation Tax Efficiency
Contributions made by your Company into the SSAS are tax-deductible, reducing your Company’s overall Corporation Tax liability on those amounts up to 25%. Furthermore, because your SSAS is a scheme of your Limited Company, fees and costs associated with the running of the SSAS can be paid by the Sponsoring Employer and are tax deductible.
How to Set Up a SSAS
If you would like to set up a SSAS with One Crown Pensions, we make it easy. The majority of the process can be completed online, even on your smartphone.
Find Out More About SSAS
If you would like to explore SSAS further, we have a wealth of video resources available in our SSAS Video Hub.
If you would like to discuss opening a SSAS or if you have further questions, book a call with us today.
