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Is a SSAS right for my client?

Family business

SSAS pensions offer the most flexibility amongst pension plans, but with the same tax efficiencies as other schemes, making them very attractive for company directors. A number of business owners and directors, especially those in family run organisations, establish a SSAS to fund their retirement but with the added flexibility of allowing them to invest in their business. The members of the SSAS are usually also Trustees allowing them to have full discretion as to how the pension fund is invested. It is always recommended that, unless pension schemes are your area of expertise, a professional Trustee or Practitioner is employed to administer the scheme.

Some of the benefits include:

  • The scheme can make a loan back to the sponsoring employer who can use the proceeds to invest in their business, provided they have adequate security
  • When the SSAS buys commercial property from your business, it means a transfer of funds to your business
  • It allows greater flexibility and fluidity through family generational changes in the business
  • Tax reliefs (within HMRC limits)
  • All investments are owned at scheme level which may aid succession planning.

Transferring commercial property into a SSAS can be a smart business move as the following example shows:

  1. Purchase – Mr Jenkins has a family business. The family (father, mother, 2 sons and 1 daughter) own a manufacturing company with a commercial property that has a valuation of £500k.
  2. The company requires a cash injection for the purchase of new machinery.
  3. The company directors open a SSAS and use the funds in the SSAS to purchase the factory from the business. The SSAS now owns the property and Mr Jenkins’ business receives a valuable cash injection; the business becomes the tenant. A Declaration of Trust is established to set up the new scheme.
  4. Rent – The surveyor calculates the rent of the factory at £50k per annum, and this then gets paid by the member’s business as the tenant into the SSAS bank account.
  5. Sale – 10 years later the SSAS members instruct Yorsass to sell the property as they have a buyer and they plan to wind up the business; property prices have risen well and they stand to make a profit which comes back to the SSAS.
  6. Tax efficient – Any rent paid into the SSAS is usually free from income tax and the rent can be invested into an investment portfolio; growth on the property value is usually free of Capital Gains Tax.

Yorsipp are authorised and regulated by the Financial Conduct Authority under reference 464198 but are not authorised or regulated to provide financial advice. The above guide is intended for use by financial advisers only and is based on a simplified case scenario and should not be construed as being indicative of a specific case or clients’ circumstances. Yorsipp will only accept new SIPP applications from a suitably qualified financial adviser. Consideration will also need to be given for legal fees/disbursements, Yorsipp’s fees, any adviser fees and any other costs associated with the property.

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