Most of us – no matter how financially savvy we are – get confused with the different pension terminology which exists today: SIPPs, SSAS and FURBS! It’s no wonder that self-invested pensions can be a little bewildering and something that we delay actioning until we have some time to look at it properly – the “I’ll get round to it one day” pile. However, there are real opportunities for business owners within the manufacturing sector to use SSAS to their advantage. Let’s take a closer look.

SSAS – what are they?

SSAS stands for Small Self-Administered Scheme.

SSAS have been authorised by HMRC since 1979 – 12 years before the first SIPP (Self-Invested Personal Pension) was launched.

They are pension schemes which are set up by an employer, usually for senior employees or directors. They are a very favourable option for business owners looking to invest for the future in a tax efficient way whilst retaining control of their investment strategy.

HMRC registered SSAS may enjoy tax-exempt status, all investments made will be free of Capital Gains Tax, and contributions to the SSAS will receive tax-relief.

SSAS are not as complex as people may think and they can be set up in such a way as to mirror the way that you run your business.  The costs of setting up a SSAS are lower per member and there are some considerable advantages for business owners.

Buying your company property

Through your SSAS you can buy your company property and lease it back to the business. The property investment will not be subject to Capital Gains Tax, the rental amount will be regular income in to the pension fund and for the business will be an operating expense, therefore reducing taxable profit and the amount of corporation tax payable.

Pension monies may be used for land and commercial property transactions, but residential property cannot be purchased.

The legal due diligence can be carried out by lawyers expert in SSAS property investments. The Wright Hassall team of partner Terry Dickson and senior associate Andrew Jones regularly work with business owners and pensions administrators in completing the legal due diligence on such investments and during 2016 carried out on average one SSAS property investment per month for business owners looking to purchase and lease back.

Investing in your company

Uniquely, and unlike SIPPs, funds in SSAS can be loaned to your business (called the ‘sponsoring employer’) provided certain criteria are met and loans do not exceed 50% of fund value. If you are considering investing in new manufacturing equipment for your business, a SSAS may be a great option to consider for funding that investment.

Every investor’s financial circumstances are unique and a SSAS should only be considered once specialist financial advice has been received from a qualified financial adviser.  

For more information, please contact terry.dickson@wrighthassall.co.uk

About the author

Terry Dickson Partner

Terry is a real estate partner specialising in asset management; acquisitions and disposals for both investment and redevelopment purposes.