Sass (small self administered scheme)

A major appeal of a SASS is the facility it provides to lend money back to the sponsoring employer, as things currently stand in the world of credit many companies are exploring this as an alternative option.

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.

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.

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 monetary value by way of a first charge
• The loan’s terms should be no longer than 5 years
• Interest of 1% above bank base rate should be charged on the loan

There are other methods of releasing funds from pension vehicles to assist a company’s cash flow; these include the purchase of assets from the company such as commercial property or intellectual property including trademarks.

Through a SSAS you 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.

SSAS 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.

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.”