Condition Requirements that must be met
Maximum loan The amount of the loan, together with outstanding amounts of any existing loans to sponsoring employers, must not exceed 50% of the net market value of the SSAS fund at the time the loan is made.
Repayments Loans must be repaid in equal instalments, either monthly or quarterly, of capital and interest for each complete year of the loan. An incomplete year at the end of the term is treated as the final complete year.
Loan term The maximum term is 5 years from the date the loan was advanced. The total amount owing, including interest, must be repaid by the loan repayment date.
Interest rates The minimum interest rate a SSAS may charge is calculated at 1% above the average of the base lending rates of 6 leading high street banks. Higher rates may be charged but only if the terms applied mirror a commercial loan offer and can be evidenced. We will require the interest rate to be fixed at outset.
Security The loan must be secured by a first charge on a suitable asset of at least the equivalent value to the loan plus interest. The asset charged need not be owned by the borrower. This is the most difficult of all of the conditions to achieve.

Although HMRC will permit any asset to be used as security, certain assets will create tax problems and liabilities in the event of default. For example, plant and machinery often realise significantly less than book value in the event of a company failing.

In addition, the act of seizing any such ‘tangible moveable property’ by the Trustees on default by the sponsoring employer immediately gives rise to tax charges on the members and the SSAS. 

Dentons' position is that security must take the form of UK land or property and we will review each proposal individually.
Please note: The loan can only be used to acquire taxable property provided that the taxable property is to be used for the purposes of the sponsoring employer's trade, profession or vocation or for the purposes of the sponsoring employer's administration or management, and is not occupied or used by a member of the SSAS or a connected person.

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