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HMRC SSAS Pension Rules
SSAS pensions are regulated and subject to HMRC rules as well as the regulations set out by The Pensions Regulator. It is vital that you are aware of SSAS pension regulations so that you are compliant and avoid any fines or penalties.
We know pensions can be complicated. While the concept of saving for retirement sounds simple, the do’s and don’ts surrounding SSAS pensions can make people nervous.
At One Crown Pensions, we like to keep things simple. With over 15 years’ industry experience, we know SSAS pensions inside and out. We stay up to date with the rules and regulations and are here to help you. We’ll take care of the details so that you can focus on the big picture.
Let’s talk about SSAS pension regulations.
SSAS Pension Regulations
- A SSAS pension is a type of self-administered pension scheme available to Company Directors.
- It allows up to 11 members to make contributions and take control of their investments.
- All members of the SSAS are trustees. They run the SSAS.
- The scheme itself is managed by a Scheme Administrator. This person can also be a member of the SSAS.
Let’s take a closer look at HMRC SSAS pension rules.
A SSAS Must Be Registered with HMRC
HMRC SSAS pension rules state that a SSAS must be registered with HMRC to start making contributions and investing. This will ensure you are compliant with regulations and that you qualify for tax-exempt status.
This means the contributions you make into the SSAS are exempt from certain taxes, such as Capital Gains Tax. Registering with HMRC also allows for property investments to be made in a tax-free environment.
Once your SSAS is officially registered with HMRC, you will receive a Pension Scheme Tax Reference (PSTR) number. You should not make any contributions into your SSAS (or transfers from any existing pensions) until you are officially registered and have received confirmation from us.
Any contributions made before registration has been confirmed will not qualify for tax relief and any transfers from pre-existing pensions into the SSAS will be considered unauthorised.
Register with The Pensions Regulator
The law requires that all work-based pension schemes (this includes SSAS) are registered with HMRC and that SSAS schemes with more than one member are registered with The Pensions Regulator. This ensures your pension is protected.
If you do not register your SSAS with The Pensions Regulator, you could face significant fines. What’s more, if you register your SSAS pension late you will be required to pay back the levy. This will be calculated on your behalf and requested directly from you. So, it is vital to register with The Pensions Regulator and do so within the set deadline. We, of course, will help you do this.
SSAS Borrowing Rules: Can a SSAS Borrow Money?
One of the great benefits of SSAS pension schemes is their unique loanback offering. A scheme member can borrow money from within the SSAS to gain the capital needed for business investments and improvements. However, it is important to follow the SSAS borrowing rules in order to avoid fines, penalties, and high rates of interest.
SSAS Borrowing Limits Set at 50%
If you’re wondering, can a SSAS lend money to a company - the answer is yes. How much can a SSAS borrow? Well, standard lending rules apply to SSAS loans and state that 50% of the scheme's value can be loaned back to the sponsoring company. So, as an example, where the total SSAS pension pot is worth £100,000, the maximum amount available to borrow would be £50,000.
Five-Year Repayment Terms
To protect your SSAS pension scheme and to avoid HMRC penalties, you must ensure you adhere to the SSAS borrowing rules. One of these rules is that any and all loans taken from the SSAS must be repaid within a maximum period of five years. Therefore, before borrowing money from the SSAS all members must agree the loan can be comfortably paid back within the five year timeframe.
Capital and Interest Repayments
When it comes to SSAS borrowing rules, it’s important you know that all loans must be repaid in equal instalments of interest and capital. If you fail to meet these conditions, the loan is considered an unauthorised payment and therefore tax charges will apply.
Interest Rates
Borrowing money from your SSAS pension means you can avoid the process of applying for a bank loan. Rules state that interest payable will need to be set at a commercial rate, with Loanback interest needing to be set at least 1% above that of high-street lenders.
Borrowing Against an Asset
As loan collateral, the borrower (typically the sponsoring employer) must give the SSAS first legal charge over an asset. There may not be any outstanding loan made against that asset which would take priority and the value of the asset must be the same as that of the loan.
Finding an asset that adheres to the rules can be difficult for some people. While most people use property as an asset, others will have property that is already tied up on a prior charge and is therefore unsuitable to use as an asset. Speak to us for more.
What Happens if I Don’t Follow the SSAS Pension Regulations?
Failing to follow HMRC SSAS pension regulations can result in hefty fines. For any pension transaction that breaches HMRC’s rules, HMRC fines for 55% of that transaction. In addition to the fine, the non-compliant individual or company typically comes under increasing scrutiny by HMRC. This can have a negative impact on your reputation and could negatively impact your future personal and professional financial endeavours.
One Crown Pensions Ensure SSAS Regulations Compliance
At One Crown Pensions, we submit your yearly pension records to HMRC on your behalf, guide you through the set up process and ensure all your investments are compliant with the rules. This ensures the nitty gritty details are taken care of so that you can enjoy the full benefits of your SSAS.
Expert SSAS Rules and Regulations Guidance
As HMRC registered pension practitioners, we are fully equipped with the knowledge and industry experience to provide expert guidance. Our team is always available to offer assistance and ensure the decisions you make around your SSAS do not contravene existing regulations.
This lets you have autonomy over the pension fund, knowing you’ll be kept on the straight and narrow. At One Crown Pensions we keep things running smoothly so that you can make the most out of your SSAS.
