How SIPPs & SSASs can Support Business Growth

Self invested personal pensions (SIPPs) and small self administered schemes (SSASs) can offer valuable and strategic financial opportunities for business owners – particularly those running small to medium sized enterprises (SMEs).

Asset purchase from a member or connected business

SIPPs and SSASs can provide a wide range of investment opportunities, including:

• UK commercial property
• Loans to sponsoring employers (SSAS only)
• Unquoted shares in UK companies

Where the vendor of the assets is the member (either personally or via their business) the SIPP or SSAS can purchase the asset, providing an immediate cash injection to the vendor. The cash can then be used to improve liquidity, boost working capital, or support continuity planning for the business.

Please note: Dentons requires all such transactions to be commercially justifiable and valued by a professional valuer. The investment should be commercial and in the interests of the pension scheme member(s). Each proposal will be reviewed by Dentons’ Investment Committee prior to acceptance of the investment.

UK commercial property

Some properties which can be acquired include:

• Industrial units
• Warehouses
• Offices 
• Shops
• Other acceptable properties.

Using a SIPP or SSAS to purchase a UK commercial property from the member or a connected business can provide both the business and the trustees of the SIPP/SSAS with significant benefits:

• Rental payments are paid into the SIPP or SSAS bank account and should be allowable as a business expense
• Rental income received by the pension scheme is tax-free
• Capital growth in the value of the property is free from capital gains tax.

Once the purchase is complete the business or member will receive the cash from the sale proceeds and will be able to use this cash injection for investing in the business through business expansion, innovation or other operational improvements. 

Dentons can facilitate outright or partial property purchases, including joint acquisitions with other parties, enabling full flexibility in more complex arrangements.

SSAS loan back facility

A SSAS is an occupational pension scheme and can be a valuable tool when it comes to supporting a sponsoring employer’s funding requirements.

This unique feature of a SSAS allows it to lend money to a sponsoring employer which must be conducted under HM Revenue & Customs (HMRC) conditions to avoid an unauthorised payment tax charge. The loan must: 

1. Not exceed 50% of the scheme’s net asset value
2. Be repaid in equal capital and interest instalments (at least annually) over a maximum term of five years
3. Reflect a commercial rate of interest
4. Be secured by a first legal charge over a suitable asset or assets

This feature can provide a business with access to an alternative source of funding, while allowing the SSAS to earn a commercial rate of interest on the loan and to boost investment returns.

Please note: Dentons will review all SSAS loanbacks to ensure that each of the loan’s criteria is met following HMRC rules.

Unquoted shares

Unquoted (or unlisted) shares can play a meaningful role in business funding by raising capital privately without the need for a public offering.

The money raised through a shares issue could then be used to expand operations, hire new talent, fund product development and/or strategic acquisitions or for expansion to enter new markets, amongst other things.

Unquoted share issues can help fuel business growth but come with higher risk than some other types of investment. 

Dentons requires:

• A minimum pension fund of £100,000
• At least three years’ positive trading accounts for the unconnected unquoted UK limited trading company

Succession planning

A SSAS can help facilitate intergenerational planning. Family-run businesses can benefit from a SSAS’s ability to include adult family members (currently or formerly employed in the business) as trustees and members. This can help with long-term wealth preservation, control, and succession planning.

Taking advantage of opportunities

For business owners looking to grow their companies while maximising tax efficiency and long-term retirement planning, SIPPs and SSASs offer valuable, often underutilised opportunities.

Whether through commercial property acquisition, pension lending, or strategic investments in unquoted businesses, self-invested pensions can provide a practical financial toolkit to help fuel business development.

To find out more about how Dentons can support your pension investment strategy, speak with our Sales Support Team or contact your Regional Sales professional.