Pool House Professional Trustees
offer a range of services to companies delivered with a high level of professionalism and technical knowledge.
A SSAS has a unique position in approved retirement saving, whereby whilst it is there to provide pension benefits in the long term it can also assist in your business planning and growth throughout.
The main areas we can assist our clients are in commercial property purchase and scheme loan backs. Purchasing the property you trade from in your pension scheme means you are paying rent to yourself, which aids in your pension growth whilst keeping control over the asset. Scheme loans allow up to 50% of the pension scheme net asset value to be lent back to the Principal Employer; a bit like your own bank it will need to have agreed terms, which are agreed with HMRCWhy purchase property through a SSAS?
A profitable company can reduce its corporation tax liabilities and build substantial retirement funds by using a Small Self-Administered Scheme (SSAS) to buy the premises from which the company trades. The SSAS buys the commercial property from the business, and leases it back to the Employer, at a commercial rent.
- The rental paid is a fully tax deductible expense for the company thereby reducing potential corporation tax, and can be paid in addition to maximum pension contributions per annum. Rental payments do not attract any taxation costs whilst within the pension scheme.
- There will be no capital gains tax to pay when the property is sold by the Pension Scheme.
- As the property is an asset of the Pension Scheme it is protected from company creditors.
- Substantial funds can be built up for the directors without the need for any further contributions.
- There is scope for the pension scheme to invest capital back in the company through self-investment.
- Any purchases or tenancies with yourself or your business are regarded as a connected party transaction, so must be confirmed by independent valuation.
Funding for the property purchase can come from a number of sources:
- Transfers from existing Pension Plans.
- Contributions made by the Employer (which qualify for tax relief in the year they are made, provided they are wholly and exclusively for the purposes of the Employer’s trade).
- Borrowing from a Bank or Third Party.
A company wants to borrow funds to help them expand their business. The Scheme can loan up to 50% of the net asset value of the SSAS back to the Company.
The rate of interest can be as low as 1% above the average of the base lending rates of the 6 leading high street banks for a maximum term of 5 years, payable on a capital interest basis (in equal monthly instalments). A first legal charge is taken over the security offered. The company may also wish to arrange some life assurance cover for the duration of the loan, so that they can repay the debt in the event of the early death of the director(s).
The company can receive corporation tax relief on the interest payments and the Scheme does not have any tax to pay on the interest payments received.
We can take over an existing SSAS arrangement by executing a Deed and removing the existing Professional Trustees and appointing Pool House Trustees to replace them.
We supply the draft Deed and update the Scheme Rules, and you simply provide us with authority and complete an Employer application form, and Member takeover application form. Pool House Trustees will then write to the existing SSAS provider to request details of all of the Scheme Assets, and to obtain confirmation that there is no reason why we cannot be appointed.
Pool House Trustees will be appointed as Professional Trustee, and Scheme Administrator/Practitioner. We will also be co-signatory to the Scheme Bank Account.
Depending on the type of assets held within the scheme, we may need to re-register the ownership to reflect the new Independent Trustee.
You can invest in a wide range of investments through your SSAS, which are chosen by the Member Trustees.
All members have to agree to all investment decisions, unless delegated to a discretionary investment manager. SSAS investments can include loans, commercial property, equities, gilts, managed funds, unit trusts, structured products and deposit accounts.
Through our FCA regulated company Pool House Advisers can advise on a range of investment options, taking into account not only the Member Trustees requests but also the wider retirement planning considerations and cash flow needs for occurrences such as retirement and pension commencement lump sums. For more information please contact us or click on this link.
The lowest age for drawing benefits is age 55. There is no upper age; though from age 75 there are certain restrictions. One of the main attractions of a pension scheme is that 25% of the fund value can be taken as a tax free lump sum when benefits are drawn, provided that the member does not exceed the lifetime allowance from all schemes. This can be taken all in one go, or in tranches known as phased retirement.
The lifetime allowance is £1 million for the tax year ending 5th April 2018, however has been as high as £1.8m and had no restriction prior to A-day in 2006. Pool House Trustees can review your individual circumstances and advise on any potential consequences or liabilities in relation to the lifetime and annual allowances. If the value of a person’s benefits exceed the lifetime allowance as the benefits start, then an additional tax charge of 25% is levied on any extra fund used to provide pension, or 55% on lump sums (unless previous lifetime protection has been applied
All pension income payments are payable through the standard HMRC PAYE system, which your scheme shall have its own registration for when required. With the new Pension Freedoms there is no longer any restriction on the amount you can draw, and it may be possible with careful planning to reduce your income and tax bills in retirement).
Pension Freedoms mean that you never have to purchase an annuity and can draw down any of your pension funds as required; whether this be capital or income it is all paid out of the pension scheme as PAYE income.
You can normally choose to take up to 25% (a quarter) of your pension pot as a tax-free lump sum.
You then move the rest into one or more funds that allow you to take an income at times to suit you.
Some people use it to take a regular income. The income you receive might be adjusted periodically depending on the performance of your investments.
There are two main types of income drawdown product:
- Flexi-access drawdown – introduced from April 2015, where there is no limit on how much income you can choose to take from your drawdown funds
- Capped drawdown – only available before 6 April 2015 and has limits on the income you can take out; if you are already in capped drawdown there are new rules about tax relief on future pension savings if you exceed your income cap
Death in Drawdown
On the death of a member, the pension is payable to his/hers nominated beneficiaries as follows:
- Death before age 75 – beneficiary options:
- Take a tax-free drawdown pension fund lump sum death benefit
- Take tax-free income from flexi-access drawdown
- Buy an annuity which will be paid tax free
- Death after age 75 – beneficiary options:
- Take a drawdown pension fund lump sum death benefit which is taxable at their marginal rate of tax
- Take income from flexi-access drawdown taxed at their marginal rate