Ever heard of a property pension called SSAS?

 Happy New year to all! As we commence the year I thought it apt to plant the seed of financial planning into the minds of those who are thinking of future pension options. We’ll be looking specifically at a pension fund known as a SSAS; how it works, how it benefits you and why it can be an essential addition to your business.

What is a SSAS?

Small Self Administered Scheme (SSAS) is a UK occupational Pension scheme that can be set up individually if you are a director of a company. This applies not only to limited companies but to Partnerships and Families.

The size of the entity and its trading status is not important. If there is more than one director the fund can be distributed proportionally to the amounts put in by each party. If agreed amongst the directors each director can also have their own respective SSAS.

The general set up of most generic pension schemes often see funds invested into stocks and shares, which of course is unpredictable and thus agreed upon by the investor in the legal terms and conditions. They will also see the owners of the schemes being charged fees, which many remain ignorant about.

In contrast, a SSAS gives you complete autonomy and rule over any investment decisions. The costs are also low as they can be run for as little as £500 a year for management.

To establish a scheme is straightforward. Find a competent tenancy deposit dispute solicitors no win no fee who is adept in the property field, that you can work with to work on a plan for your money. The scheme then needs to be registered with HMRC.

Once this has been completed a bank account can be set up to be used for holding your funds for your intended investments. You also have the ability to transfer funds from any previous pension schemes into your SSAS.

What really separates a SSAS from other pension schemes is the list of benefits and options it offers. There are some restrictions as to what can be done with the available funds but it has the ability to enable you to benefit as a vehicle for a tax-free status.

Owning residential properties within a SSAS will incur substantial tax charges unless they are sold out of the fund as an investment. You will also find that blocks of flats and HMOs are not considered commercial properties by HMRC. So you must keep this in mind when planning out your investment strategy. Further investment options are detailed below:

Assets permitted by HMRC includes:

    Commercial property and land
    Equities regardless of whether or not they are quoted on a recognised stock exchange and regardless of whether the company is a UK company or an overseas company
    Futures and options traded on recognised futures exchange
    Authorised UK unit trusts and OEICs and other UCITS funds
    Unauthorised unit trusts that don’t invest in residential property
    Investment trusts subject to FCA regulation
    Unitised insurance funds from EU insurers and IPAs
    Intangible assets such as intellectual property (IP)
    Cash deposits and deposit interests
    Traded endowment policies
    Derivative products i.e Contract for difference (CFD)
    Gold Bullion
    P2P Lending is also eligible across some platforms

Investments currently permitted by primary legislation but subject to heavy tax penalties include:

    Any item of tangible movable property (whose market value does not exceed £6,000) – subject to further conditions on use of property
    Other exotic assets like vintage cars, wine, stamps, and art
    Residential property

(Sources: HMRC, www.bondmason.com, Wiki)

One of the biggest benefits of a SSAS pension for the holder is their ability to use 50% of the value of their own business as investment capital. Additionally, a SSAS set up in conjunction with a limited company can enable the holder to use 50% of the funds as investment capital for their business. When doing this the money is treated as a loan, which helps also the tax liability of the company as the interest payments will be tax deductible.

Such a set up can also be used for Joint purchases.

Individual Directors over the age of 55 have the ability to use 75% of their money within their company. This can be done by borrowing 50% as a loan and 25% additionally tax-free. The borrowed amount can be repaid over 5 years with legislation allowing you to extend the term for an additional 5 years. Interest will be paid on the loan which will grow the value of the fund.

A SSAS offers all the benefits other pensions and more. For further details please seek the advice of a specialist property accountant professional.