What is a SSAS?
A small self administered scheme or SSAS is a bespoke occupational pension scheme created specifically for an employer. It gives its Members considerable flexibility and control over the investment policy and underlying assets. To ensure a SSAS qualifies for various legislative exemptions and has as much investment flexibility as possible, it can have no more than 11 Members, each of whom is a Trustee and all their decisions are by unanimous agreement. Although there is no lower or upper age limit for Members, there is a minimum age of 18 in order for the Member to act as a Trustee.
SSAS opportunities
SSASs are member-directed registered pension schemes and thus offer a wide range of permitted investment opportunities. In addition to those offered by Self Invested Personal Pensions (SIPPs), a SSAS can lend money to the sponsoring employer providing 5 key criteria are met:
- up to 50% of the fund can be loaned
- maximum term for the loan must be for no more than 5 years
- equal repayments of capital and interest monthly or quarterly
- minimum interest rate a scheme may charge is calculated at 1% above the average of the base lending rates of 6 leading high street banks
- the loan must be secured by a first charge on a suitable asset of at least the equivalent value to the loan plus interest.
Dentons SSAS structure
With its intelligent structure, our SSAS offering is designed to provide greater flexibility in investment opportunities and expert support. We can even take care of all the necessary paperwork to establish or takeover the SSAS, register the scheme with HM Revenue & Customs (HMRC) and set up the initial bank account.
For our SSAS, Dentons trustee company (Denton & Co. Trustees Limited) will fulfil the role of Scheme Administrator, as required by HMRC to:
- register the SSAS with HMRC
- report events relating to the SSAS and the Scheme Administrator to HMRC
- make returns of information to HMRC
- provide information to the SSAS Members, and others, regarding the lump sum allowance, benefits and transfers.
Tax benefits
Under current legislation a SSAS enjoys considerable tax benefits:
- employer and Member contributions normally qualify for tax relief subject to certain requirements
- investment income and gains (other than dividend income) are generally exempt from UK income tax and capital gains tax (CGT)
- lump sum benefits on a Member's death will typically be free from inheritance tax
- fees for administration of the SSAS can be paid by the sponsoring employer and it should be treated as a business expense.
Who can be a Member of the SSAS?
Every employee, ex-employee, officer or ex-officer of a sponsoring employer is eligible for membership of the scheme. A person eligible for membership of the scheme shall become a Member by invitation and on such terms as the Trustees shall decide.
SSAS administration
The day to day administration of the SSAS is delegated by the Trustees to Dentons who will normally carry out the following administration duties:
- Report events online to HMRC e.g. the payment of certain lump sums, an unauthorised payment and the winding up of the SSAS.
- Make returns of information to HMRC e.g. details of the SSAS investments held, acquired and sold during a tax year in the online Registered Pension Scheme Return.
- Provide an annual statement and Statutory Money Purchase Illustration (SMPI) to Members.
- Provide information to Members and others regarding the lump sum allowance, benefits and transfers.
- Generally undertake such other tasks so as to maintain the beneficial tax status of the SSAS.
