The Business SSAS

Optimum tax efficiency, business growth and funding

The Business SSAS is a Small Self-Administered scheme (SSAS), established by the director of a trading company. The SSAS is the most flexible UK pension and gives control back, over frozen or dormant workplace and personal pensions.

The Business SSAS pension. Innovative strategies for SME businesses providing control, flexibility and optimum tax efficiency.

Pension pooling company directors

What is the Business SSAS pension?

The Business SSAS pension is a Small Self-Administered scheme (SSAS), established by the director of a trading company. The SSAS is the most flexible UK pension and gives control back, over frozen or dormant workplace and personal pensions.
Whilst many see pensions as boring, inflexible and inaccessible until after age 55, the Business SSAS pension is the opposite. It is merely a savings and investment account inside a tax efficient wrapper.
Created by government, under HMRC regulations, the Business SSAS allows business owners to align their pensions and their businesses to achieve optimum tax efficiency. In addition to all of the benefits traditional pensions offer, there are extensive tools and advantages such as the ability to loan to your business from your pension, invest in property, loan to a 3rd party, build a legacy, ring-fence and secure assets, save on inheritance tax and much more.
Unlike the SIPP, which is a personal pension, the Business SSAS is a corporate pension and so regulated by HMRC and The Pensions Regulator.
A Business SSAS pension scheme can have up to 11 members. These members can be other company employees and/or family members. This offers added advantage as, not only can you combine all of your own pension into one pot, but you can pool pensions with other members, giving greater investment choices and power. All members retain the same percentage portion of the total pot, but as it grows at a faster rate and enjoys extensive tax benefits, each member elevates their own funds.

Company Director looking at watch

Why have a Business SSAS?

In addition to the usual tax exemptions available for pensions, a Business SSAS pension offers greater control and flexibility over business and personal assets, when integrated into your strategy. Innovative strategies can be created to grow your business, save tax, and elevate the growth of your retirement fund for yourself and other SSAS members.
For SME businesses, the SSAS is a gamechanger.

Man looking at pension statements on laptop

Potential strategies that a Business SSAS could employ include:

  • Use the SSAS loanback facility to achieve much needed business funding
  • The purchase of commercial property. This could include the business premises. Premises can be leased back to the company or a 3rd party
  • Rent paid by the company, to the Business SSAS, is an allowed business expense and those funds paid from company to SSAS reduce profit for the year-end tax bill calculation
  • Rent received by the SSAS is not liable for income tax
  • Profit made upon the sale of the premises is not liable for corporation tax
  • You are able to make a loan from your Business SSAS pension, to your company, providing essential cashflow
  • A loan from your SSAS to your company could be used to purchase property or for the development of property
  • You could use your SSAS to buy an equity stake in the company, providing cashflow
  • Fees are not dependent on fund size, so consolidation of funds is possible for easier management, greater growth and control
How to invest via pooling of your pension

A source of finance

 

The ‘loanback’ is a unique feature of the business SSAS pension that many SME directors are often unaware exists. It offers the ability to make a business loan of up to 50% of the value of your pension to your company, for any valid business purpose. For example, you could use the funds in your pension for stock acquisition in your company, or if needed, a simple capital injection.

Doing so saves approaching the banks, waiting for decisions and the fees and charges experienced

Click here to read more about the SSAS loanback…

A strategy for increased
tax efficiency
and growth

 

The loanback must be paid back to the Business SSAS pension with an interest rate sat at a minimum of 1% above the current market base rate. For some, this is ideal as a cheap loan when the company needs it. For others however, a strategy of setting the interest rate much higher means that company payments to the SSAS are an allowed business expense, year-end profits and thus, tax, is reduced, the SSAS receives the payments without liability for income tax and this can be repeated once the loan is paid back, using 50% of a now increased pot.

Essentially, the loanback facility is an interest free strategy, as all funds are retained either by the company or by the Business SSAS.

For family businesses

 

The advantages of a Business SSAS pension for family businesses are vast. In addition to the above business and retirement fund growth and control, a SSAS can protect family assets and reduce inheritance tax. Business continuity can be assured as generations move through the business and the SSAS facilitates straight-forward exit strategies as company members retire. Assets held within the SSAS do not form part of the estate, avoiding extensive legal fees and time when passing them on and assets are ring-fenced from creditors. A SSAS is a family asset that can be handed on and continued for many years. This is covered in more detail in our Family SSAS pension section.

Click here to read more about The Family SSAS…

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