The Small Self Administered Scheme (SSAS) is more than just another pension plan.

The Small Self Administered Scheme (SSAS) can be route to huge tax savings, an effective mechanism for transferring a family company from the old to the young, and also build up into a private bank that will always say yes.

The Small Self Administered Scheme (SSAS) is only suitable for the controlling directors of companies, which makes it idea for most small limited companies where the shares are mainly or wholly owned by working directors. ( The definition of controlling director is a very wide one, and in practice most important people in most smaller companies will qualify if they or their family own any shares ).

The Small Self Administered Scheme (SSAS) derives its attractiveness from several key powers open to the Trustees , and the technical details of its structure. The main, but by no means all, points, ( with links to explanations and examples ) are as follows:-

The SSAS is also protected from creditors, which can be useful given a recession every 10-15 years during a companies life.

Tax relief is given against corporation tax for company contributions, and personal income tax for any personal contributions.

The powers open to the trustees mean that the pension funds fortunes may be tightly bound to those of the company. For this reason only those willing to accept that risk, ( normally therefore the directors and family only) should be members. ( If any member does not want to take the risk they can effectively stop use of the attractive powers outlined above by simply not enabling unanimous actions to occur ).

Setting up a SSAS
Normally started by using a core investment in a pension providers policy, which provides a key investment, and also gives access to specialist services at a reasonable cost. ( You can also use a consultant to develop and run your scheme, but this can be relatively expensive unless you intend to invest at least £50,000pa, and even then the pension provider route may be better ).

Some companies offer what is known as a Deferred SSAS. This is simply a SSAS that invests wholly in insurance company pension funds, ( like an EPP or PPP ), and avoids the usual SSAS charges until such time as the Trustees use one of the extra powers.

The pension company will ensure that the scheme remains within the rules by acting as Pensioneer Trustee.

The investments MUST be made before the company year end of the year in which corporation tax is to be relieved. This means that you should ensure that your accountant has, within the final month, a very good idea as to corporate profits.

The other area to review is the remuneration basis. Contribution limits depend on salary, ( Schedule E ), and the higher the salary the higher the permitted contribution, and therefore the greater the tax saved. The details are complex, but in many cases it is overall more beneficial to alter the balance between dividends and salary in favour of salary, ( even at the cost of a higher personal tax liability ). I once saved tax for a client by increasing his salary from £60,000 to £120,000 pa.

The eventual routine should be, in the final month or so of the company year, with cash awaiting investment, to review anticipated profits and remuneration, then doing a computation to strike the most tax efficient balance to use the funds available. This may sound like a complex situation, involving company directors, accountants, IFAs and insurance companies: it is. Clear diaries are essential. For more information, please contact us on 0191 488 8445 or use this email link. office@hrcgroup.net