SSAS explained


Small Self-Administered Schemes (SSASs) can invest in a wider range of assets compared to other pensions.

The investment flexibility offered by a SSAS is one of the key reasons they are attractive to many business owners. Technically, you can invest in anything, however, you would be extremely unwise to do so as many investments, such as residential property, will incur tax charges.

Popular investments in the SSASs which we manage include:

Commercial property is a popular investment option.

Using your SSAS to buy commercial property – and it’s important to note that this only applies to commercial property rather than residential property – is extremely tax-efficient. You will pay no tax on the rent you receive or on any growth in the value of your property. Furthermore, the business that pays the rent, including yours, can offset it as an expense against Corporation Tax.

The property can be purchased from any other party, including those with connections to your SSAS or business, on an arms-length basis. It can also be leased to your business or a third-party business.
This means that if your SSAS invests in a commercial property from which your company operates, the rent paid benefits your SSAS rather than a third-party landlord and, while in the scheme, it is creditor protected.

Your SSAS can also raise money via a commercial mortgage. The scheme can borrow up to 50% of its assets to help fund the purchase of the commercial property in your SSAS.

Buying a commercial property in your SSAS can seem complex and there are pitfalls to avoid. However, you can rely on us to provide a safe pair of hands. We will work alongside our trusted team of specialists, including lenders and solicitors, to ensure your purchase completes as quickly and efficiently as possible.

Furthermore, we will complete the due diligence, paperwork and regulatory requirements to ensure the process is compliant.

Every SSAS must have a current account. We will arrange for an account to be opened in the name of the pension scheme, which will be operated by our professional trustee company, White Horse Trustees Ltd. The account will facilitate the day-to-day running of the running of the SSAS including:

  • Receiving pension contributions
  • Making payments to beneficiaries
  • Making investments
  • Receiving proceeds from investments
  • Receiving rental payments
  • Making mortgage payments

Cash is generally considered a relatively low-risk form of investment, although interest rates are currently very low compared to historical norms. A range of accounts is available from those offering instant access to accounts with fixed interest rates.

By tying up funds for a longer period, you can generally obtain a better return. But this may not be the best option if your SSAS has ongoing expenses or if there are members whose benefits are in payment. We can help you find the right bank or building society, and account, for your SSAS.

The SSAS will not pay tax on any interest that is received.

One of the key advantages of a SSAS over other types of pension is that it can make secured loans to the sponsoring employer.

Under the right circumstances, such loans can be highly beneficial to both your business and your SSAS.

A loan from the SSAS is available to any participating employer and provides an alternative source of business to traditional sources such as banks. An agreement is put in place between the SSAS and your business, which pays a commercial rate of interest on the loan. This means your business gets the financing it needs, while your SSAS benefits from the interest on the loan repayments. Furthermore, the SSAS pays no tax on the interest it receives, while the business can still offset interest payments against Corporation Tax.

So, while your company has the investment it needs, at the same time your pension is growing from the interest payments. All without the influence of a bank, which may impose onerous requirements such as debentures and personal guarantees.

The loan must meet five key tests, which can be a complex area, and it’s one where our expertise will prove invaluable.

Loans to your business must be repaid through regular capital repayments over a maximum term of five years and restrictions apply on the amount that can be borrowed by the participating employer. Slightly different rules apply to loans to a third-party business.

Once you have decided to proceed with a loan, whether it is to your business or a third-party, we will carry out all the necessary work to ensure it meets the key tests. We’ll crunch the numbers and ensure the SSAS complies with HMRC’s rules while developing the perfect solution to benefit both your business and your scheme.

Quoted shares traded on any recognised stock exchange are one of the most popular investments held within a SSAS. Collective Investments such as unit trusts, which invest in a variety of asset classes (including shares) are also popular.

The holdings must be bought in the name of the trustees, or the pension scheme, and be held in a designated pension scheme account. Our corporate trustee, White Horse Trustees Ltd, must be a co-signatory on the account.

Quoted shares can be purchased in one of two ways:

  • On a discretionary basis, where a stockbroker actively manages the investments, or
  • On an execution-only basis, where you select and manage the investments

In addition, the SSAS may invest in collective investments either directly or via a regulated financial adviser.

You have the flexibility to decide which investment manager or stockbroker to use, providing the firm is appropriately regulated by the Financial Conduct Authority (FCA).

A SSAS can also invest in unquoted shares, which are defined as “any holding not listed on a recognised stock exchange – either in the UK or overseas”.

If the purchase of shares is from a ‘connected party’, for example, your business, restrictions on the number of shares that can be purchased will apply.

Investing in unquoted shares can be complex and high risk. Furthermore, unquoted shares can be illiquid and difficult to trade, which may cause problems with the cash flow of your SSAS. Therefore, before proceeding with any investment, thorough due diligence needs to be completed.

There are many other types of investment which a SSAS can hold. This is just a list of the most popular assets.

It’s all about choice and flexibility.

It is essential that you are confident that the assets you choose to hold in your SSAS are right for you and your circumstances. It’s also important that you don’t hold assets which will incur tax penalties. Therefore, you should take financial advice before making any big decisions.

As trustees, we’re here to help too.

We are unashamedly conservative in our approach to the investments you can hold in your SSAS. As joint trustees alongside you, we will help ensure the investments you make will not incur tax penalties.

If you would like to learn more about how a SSAS can benefit you and your business, please get in touch by completing the form below or calling us on 0800 612 6644.

Learn more about SSAS

Small Self-Administered Schemes (SSAS) offer greater flexibility and wider investment options than other pension schemes. However, they are often misunderstood. The following information is intended to help you understand more about what is possible with a SSAS.

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