fbpx

Do you know that you may be able to utilise your former employee or private pensions to fund and invest in your SME firm or house? You might also be surprised to find out that you might be missing out on some significant tax benefits as a result. A SSAS allows directors to manage former and current pension funds immediately, which may be put to use in their corporation or property.

If you’re the director of an SME business then did you know that you could be using your former employee or private pensions to support and invest in your business or property!?

 

What is a SSAS pension?

The ‘Small Self-Administered Scheme’ (SSAS) is a pension scheme. It is usually established through a limited company on a defined contribution basis. These are usually for the retirement benefit of directors, family employees & key personnel.
 
The Trustees run SSAS and can be members of the scheme, with contributions made to it by the members. They could also be the employer. Introduced by HMRC over 30 years ago, it’s tailored and only available to SME business owners. It has similar traits to its cousin, the SIPP, but offers its members more control and flexibility.
 
Equally unfamiliar is how cost effective they are to set up, being flexible and tax efficient. With a SSAS, you are in control. This is why they aren’t promoted as a firm favourite amongst some financial advisors. Offering company directors control over their pension funds and investments isn’t aligned with some IFA business models.

Who is eligible?

In order to set up a SSAS pension, you must be a director of a limited company. 95% of SME company directors are eligible for a SSAS pension. If you are not eligible however, you can look into a Self-Invested Personal Pension (SIPP).

If you have a SSAS already and want to invest in Commercial or Mixed Use property, then book a 1:1 call with Team NCRE here: https://go.oncehub.com/bonuscallteamncre

or

email Lorenza at lorenza@ncrealestate.co.uk to find out more.

 

What’s the difference between a SSAS pension and a SIPP?

With SSAS and SIPP pensions, you can decide how to invest your pension pot. The key difference is in the name. With Self-Invested Personal Pensions (SIPP), an individual controls his or her investments. The scheme’s trustees, however, control the SSAS. Similarly, the entire SIPP pension pot belongs to the individual. While there are no individual pots in an SSAS. Rather, each share is a percentage.
 
Small business owners may benefit from the SSAS in a variety of ways. Pension plans usually offer options such as taking a tax-free lump sum and an income in retirement. However, with the SSAS, there are several other benefits available. It may be a particularly attractive draw to buy and hold commercial property and land within a SSAS. This is both for tax and security reasons. The SSAS preserves future generations’ assets and may protect them from inheritance tax.
 
An SSAS provides a unique benefit that many small business owners don’t realise is available. Through this scheme, you can loan up to 50% of your pension’s value to your company for any purpose. For example, you may use the money in your retirement account to buy inventory for your company. Or, if necessary, as a simple capital injection. It is possible to use your pension money immediately, regardless of your age, for any purpose. To set up a company SSAS pension, you must be a director of a limited company. It is possible to invest in all the choices permitted in a standard pension scheme. This includes shares and bonds, commodities, corporate bonds, and gilts. Also, it grants the members with enormous extra powers and opportunities.

What are the benefits of a SSAS pension?

Flexible

SSAS pensions provide the same tax advantages as other plans. The main plus is greater investment flexibility. Directors of companies might find SSAS pensions attractive because of the benefits. These and other advantages make SSAS pensions an appealing option. You may invest your SSAS pension funds in a variety of ways. This includes stocks, shares, corporate bonds, and commercial real estate. Investment in commercial real estate is one of the SSAS programme’s most appealing features. This is because it allows you to invest in your company’s business premises. Then rent them back from you – a wonderful way to invest in real estate while saving for your future.

Tax Rebate

Members receive a 25% tax rebate on their contributions to a SSAS pension scheme, the same as other occupational pension plans. Capital gains tax on the sale of commercial property in the plan is not charged, in addition to the fact that most assets and investments have no tax liability. Furthermore, higher rate taxpayers can claim additional tax relief on their tax returns.

Family Benefits

Family members who are not employees can join SSASs, and the SSAS can hold assets in trust and pay benefits to families long after the original members have passed away. It is also protected from corporate and personal creditors as a pension. A company can take out a loan from its SSAS pension to fund its business at an interest rate of 1.5%, thus reducing dependence on banks and their fees.

Where can I invest my SSAS pension?

Property

A popular investment choice is property. Such investments have many attractions including the perceived security of bricks and mortar offering steady and consistent returns, plus it’s a tangible asset with relatively low volatility, in contrast to the equity markets.

Property held within the SSAS is ring-fenced from creditors and does not form part of the estate, securing it for future generations in a tax efficient manner.

Commercial property

An SSAS can also buy business premises for you. If you buy through your SSAS, the property is transferred to the pension and not subject to capital gains tax if it is later sold. The asset is owned by the SSAS, but your family will still control it because they are all members. The asset’s value may increase, but it will remain under family control.

In conclusion, the SSAS pension, if managed correctly, could benefit your family for years to come. NC Real Estate provides advice on both SSAS pensions and property investment and has equipped company directors with the necessary tools and knowledge.

 

If you have a SSAS already and want to invest in Commercial or Mixed Use property, then book a 1:1 call with Team NCRE here: https://go.oncehub.com/bonuscallteamncre 

or

email Lorenza at lorenza@ncrealestate.co.uk to find out more.