A Sipp or a Sass?

There are differences between a SSAS and a Sipp which primarily relate to the governance or structure of the scheme.
Both Sipps and SSASs are covered by the same tax regime, which means you can pay the same level of pension contributions into either arrangement and get tax relief up to a certain amount.
Assuming you are 40% taxpayers:
If you have a SSAS, your full tax relief will go straight into the SSAS, increasing the size of your pension pot.
If you have a Sipp you only automatically get basic tax relief on your contributions and you have to claim back the difference between higher and basic rate tax in your tax return.

From age 55 from either pension arrangement, you can buy an annuity from an insurance company or go into an unsecured pension. And when you start receiving your pension you can take up to 25% of the fund as a tax-free cash sum which, if you wish, you could invest in your business.’

‘A SSAS is an occupational pension scheme, which means it has to comply with onerous legislative requirements. The trustees (all members must be trustees) are ultimately responsible for complying with these regulations. They are responsible for running the scheme, carrying out the financial reporting, such as producing annual accounts, triennial actuarial valuation reports and reporting to the revenue. They have to manage the scheme’s investment policy, keep the scheme rules up-to-date and comply with the requirements of trust law. All of which can be very time consuming.’

You will have to pay someone to do the accounts, update your scheme rules and generally manage your SSAS. Fees tend not to be proportional to the size of the membership. So for a two-member SSAS you may consider the fees to be disproportionately expensive.’

A Sipp is an individual contract between you and the Sipp provider, which may or may not be a Life Office. There are fewer regulatory issues and the provider deals with compliance, so you don’t have to be involved. The cost for the provider carrying out this role for two Sipp contracts could be less than compliance fees for a SSAS.
‘Investment opportunities are another difference between the two. With a SSAS you can generally invest in a wider range of investments, although you would only be able to invest up to 5% of the scheme’s funds in employer-related shares. For a Sipp it is possible to invest more than this in employer-related shares.

However, Sipps can be more restrictive than SSASs as the range of investments will depend on that offered by the provider. Some providers may restrict investment in unlisted shares and direct investments into property.’

‘The business can have a loan from a SSAS, but it has to meet certain requirements.
It is restricted to 50% of the net market value of the SSAS,
interest must be set at 1 % above commercial rates,
and the loan cannot be for more the five years.

The business cannot take a loan from a Sipp.

Your home may be repossessed if you do not keep up the repayments on your mortgage or any loan secured upon it. You can pay for our mortgage advice service by a combination of fee only or commission that we would receive from the provider. The level of any fee would depend on the circumstance of the case but we would estimate the fee to be 0.5% of the loan advanced.
Veracity financial planning is not responsible for, nor does the Financial Services Authority regulate advice given with regard to taxation matters regard to trusts; some aspects of tax advice; commercial mortgages or second charge secured lending.
“The value of your investment can fall as well as rise and you may get back less than you pay in.”