In the intricate world of retirement planning, one size certainly does not fit all. As a small business owner or a director of a family-run enterprise, your financial future deserves a pension scheme tailored to your unique needs and ambitions. Keep reading to learn about the Small Self-Administered Scheme, or SSAS, a pension scheme that offers great investment flexibility and tax advantages for business owners just like you.
We’ll discuss its benefits, investment flexibility, and tax advantages that make SSAS a great choice for those who want to secure their retirement and thrive along the way.
Understanding the Essence of SSAS
Small Self-Administered Schemes are a specially designed workplace pension solution created with the entrepreneurial spirit in mind. Unlike other major pension schemes, SSAS puts you, the member, in control. Here’s what you need to know:
- Transfers: SSAS allows you to transfer your savings from other pension schemes, ensuring you can consolidate your retirement investments into one flexible plan.
- Exclusive Ownership: For small businesses, family-run firms, and their directors, SSAS offers an exclusive opportunity. With a maximum of 11 members allowed, each scheme belongs to a single company, fostering a sense of ownership and control.
- Defined Contribution: Like other defined contribution schemes, the value of your SSAS pension relies on factors such as the money in your pot, the duration of your investments, and their growth over time.
Major Benefits of SSAS
SSAS is more than just a pension scheme; it’s a financial ally. Here’s why it’s becoming the favoured choice for savvy entrepreneurs:
- Investment Flexibility: With SSAS, you have the freedom to invest in a wide range of assets, including commercial properties. Imagine owning your company’s trading premises within your pension scheme and leasing it back to your business.
- Tax Efficiency: SSAS offers significant tax advantages. Rent paid by your company to the SSAS is a deductible expense, reducing your corporate tax bill. What’s more, the rental income received by SSAS from your company is tax-free. Capital gains from selling the investment property (your company’s trading premises) within the SSAS are also exempt from Capital Gains Tax.
- Lending and Borrowing: SSAS can lend money to your company, supporting its financial needs. It can also borrow money, which opens doors for various investments, including acquiring trading premises or funding other ventures.
- Company Share Ownership: SSAS allows you to invest in your own company. You can acquire shares, up to 5% of the pension fund value, to the point it can own 100% of the company if it so wishes.
- Asset Protection: All SSAS assets are held in the name of the trustees, who are also members of the scheme, ensuring your investments are secure and under your watchful eye.
- Tax Relief: You and your company benefit from tax relief. You receive income tax relief on employee pension contributions at your marginal tax rate, whether you’re a basic rate, higher rate, or additional rate taxpayer. Additionally, your company enjoys Corporation tax relief on employer pension contributions.
Drawbacks of SSAS
One downside of SSAS is that, even though members can choose how to invest, it also means they need to invest their time and effort to make sure the scheme is well-managed for a good return. However, those who want to benefit from and take advantage of the tax efficiencies of an SSAS enter the scheme well prepared.
Withdrawal upon Retirement
You can access your SSAS pension at age 55.
- 25% Tax-Free Lump Sum: On retirement, you’re entitled to a tax-free lump sum up to 25% of the value of the scheme.
- Annual Income: The remaining provides an annual income.
Considering Investing in Property?
If you’re a property investor or aspire to enter the world of real estate, SSAS may be your golden ticket. With unmatched investment flexibility and incredible tax advantages, it’s the perfect companion for business owners looking to invest in commercial property.
When you purchase investment properties using the SSAS pension scheme, you not only have complete control over where your pension savings go, but you also benefit from tax-free income (rental income and dividends) generated by your investments and profits when you sell investments within the SSAS.
In conclusion, your financial future is not a one-size-fits-all endeavour. As a small business owner or director of a family-run company, your vision deserves a pension scheme as unique as you are. The Small Self-Administered Scheme (SSAS) empowers you to take control, invest wisely, and secure your retirement with tax-efficient strategies.
Don’t miss out on the opportunities SSAS presents. It’s time to take the reins of your financial future. Contact us today to explore how SSAS can work for you.
Your retirement dreams are waiting. Make them a reality with SSAS.
This guidance is for general information only. It does not replace the need to obtain independent financial advice based on your personal circumstances and unique requirements.