A SSAS is a company scheme where the
members are usually all company directors or key staff. A
SSAS is set up by a trust deed and rules and allows members /
employers, greater flexibility and control over the scheme's
assets.
Contributions paid to a SSAS are subject to the same rules as
other registered pension schemes. Consequently there is no
limit on the level of member contributions but tax relief is
restricted to the higher of £3,600 or 100% of UK earnings.
Tax relief is also limited by the Annual Allowance. Click
here to read more about the Annual Allowance.
Contributions made by the employer are also unlimited.
Employer contributions are deductible against corporation tax
provided that they are wholly and exclusively for the purposes of
the employer's trade. If an employer's contribution is over
£500,000 more than the previous year, tax relief may be spread.
Schemes with less than 12 members and where all decisions
are made unanimously or have an independent trustee, are exempt
from the trustees' knowledge and understanding requirements of the
Pensions Act 2004 and the member-nominated trustee
requirements. If every member of the scheme is a trustee, the
scheme will also be exempt from the Internal Disputes
Resolution Procedure requirements
Loans can be made to the sponsoring employer but are subject to
certain conditions set by HMRC. These
include:
- The loan should not exceed 50% of the net market value of the
scheme's assets
- The loan should be secured against assets of an equal value by
way of a first charge
- The loan's terms should be no longer than 5 years
- Interest of at least 1% above bank base rate should be
charged on the loan
The trustees of a SSAS can invest in a broad range of
investments, including:
- Commercial property and land;
- UK quoted shares, stocks, gilts and debentures;
- Stocks and shares quoted on a recognised overseas stock
exchange;
- Futures and options quoted on a recognised stock exchange;
- OEICs, unit and investment trusts;
- Hedge funds;
- Insurance company funds;
- Bank and building society deposits
- Gold bullion
Shareholdings in the sponsoring employer should not exceed
5%. Shares can also be bought in more than one sponsoring
employer as long the total holdings are less than 20% and shares in
any one sponsoring employer are less than 5%.
There is no restriction (apart from the self-investment
restrictions above) on the percentage of shares which can be held
in one company.
If the scheme is deemed to be an investment regulated pension
scheme (IRPS), tax charges will apply if the scheme invests in
taxable property. The definition of an IRPS includes:
- Company schemes where there are less than 50 members and at
least one of them (or a person related to a member) can direct,
influence, or advise on investment matters relating to the
scheme;
- Company schemes that do not meet the above conditions but a
member (or a person related to a member) can direct, influence of
advise on investment matters relating to the member's
arrangement.
Taxable property means investment in residential property and
tangible moveable property, e.g. fine wines, vintage cars etc.
If investments are made in taxable property, an unauthorised
payment charge and a scheme sanction charge will apply.
Capital gains can also apply on the sale of a taxable property.
SSASs may borrow to invest and to provide a member's benefit
which has become payable. The maximum amount that can be
borrowed is 50% of the net asset value of the scheme.
