Frequently asked questions below
A SSAS gives the largest number of acceptable investments of any pension, which allows the trustee (you) to choose the range to suit your attitude to risk. We act as professional trustees alongside you to ensure the investments chosen are within HMRC guidelines.
Acceptable investments include Equities, Gilts, Shares, Managed Funds, Structured Products etc.
*We are not regulated to give investment advice but can advise if an investment is HMRC compliant.
Yes, and also restricted to your lifetime allowance but……Employer Contributions are not limited to the annual allowance in certain circumstances.
So, if your business wants to make a pension contribution for its two directors then the total contribution in that year is limited to £80,000. If any directors haven’t made contributions in the previous three years, they may be able to contribute up to another £120,000 each. Straight away, the Corporation Tax savings are obvious.
Within the legislative framework of a SSAS there is the option to create a “general fund”. This is separate to the fund set up for each member, and its function is to take general contributions as well as funds for future administration costs.
An indirect contribution is not specifically allocated to a member in the year of contribution but will be allocated in future years or used to fund the administration expenses of the SSAS.
When funds are allocated from the general fund to a member’s personal fund, annual allowances still apply.
Although in theory there is no limit to the number of times a company can make contributions to the general fund, the number of members, their lifetime allowance and the number of prospective new members creates a natural ceiling.
It is only possible to distribute funds from the general fund to the members fund at the rate of £40k per annum until the receiving member’s 75th year, so the members ages must be taken into account.
When it comes to how much tax relief an employer can claim in any given accounting period, HMRC guidelines limit the total contributions to £500k per year.
Circumstances where the general fund may benefit businesses are:
Is it better for you personally or your business to own your commercial property? Actually there is a third option which involves establishing a SSAS and holding a commercial property in it. Property held in a SSAS brings the following benefits:
Security
A SSAS is a trust-based pension scheme. This means that should the business suffer financial difficulties in the future, creditors could not attempt to place a charge on any assets held in it.
Capital Gains Tax
Under current pension legislation, when an asset is placed into a SSAS any future growth in value is then free from Capital Gains Tax. This can be particularly useful if the asset has latent growth potential, such as development land or commercial property that might be re-developed.
Inheritance Tax
When a member joins a SSAS they complete and maintain an up to date expression of wish form. When they die, their assets within the SSAS are distributed at the descretion of the remaining Trustees. These trustees take into account the deceased member’s expression of wish but can add new members so in practice, a SSAS operates as family trust where assets can pass down through the family without the worry of IHT.
Corporation Tax
When a property is introduced into a SSAS via an in-specie contribution by a Limited Company, it would be deemed an allowable expense when calculating the company’s Corporation Tax subject to that contribution meeting the ‘wholly and exclusively for the purpose of trade test. For example, a company could contribute a commercial property valued at £200k into its SSAS. That year the company makes £200k profit. Ordinarily, it would pay £40k corporation tax. However, by making a contribution of £200k this has reduced the profit to zero, therefore no Corporation Tax would be payable.
Personal Tax Benefits
NB: When evaluating the viability of moving a personally owned property into a SSAS or purchasing a property from a third party, it is important to consider all the other tax implications, such as Capital Gains Tax, Stamp Duty, V.A.T. and Land Tax. Professional advice should always be sought.
Because a SSAS is a trust, any assets within it are protected from creditors should your business become insolvent.
If you would like to discuss any aspect of SSAS please call us on 0845 862 2869 or email us at info@ssasco.co.uk.
