A SSAS is a bespoke pension scheme created specifically for an employer and will require a package of bespoke paperwork to be produced. Registering a new SSAS with HMRC can take several weeks/months.
Under current legislation a SSAS enjoys considerable tax benefits. A SSAS can also provide flexibility in relation to the investment of scheme funds and the provision of benefits to Members and their beneficiaries.
Beneficial features of a SSAS include:
- 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 normally be free from inheritance tax
- when taking benefits, a tax free lump sum of up to 25% of the member’s share of the SSAS fund is normally available, subject to the member’s remaining lifetime allowance. In a small number of cases this could be more than 25% of the fund/lifetime allowance depending on individual circumstances
- fees for the administration of the SSAS can be paid by the sponsoring employer and it should be treated as a business expense.
A SSAS can serve as a planning tool for family businesses where children of some/or all of the Members become directors/employees of a sponsoring employer.
A SSAS can be particularly helpful for creating liquidity because of its pooled nature; for example, older Members wishing to access the more liquid assets for pension commencement lump sums/pension payments, can look to these assets within the scheme and, perhaps, less liquid assets (of equivalent value) can be retained within the SSAS for younger Members.
Once the SSAS has been established and registered with HMRC, funds can be paid into the Trustees’ bank account by way of contributions from the sponsoring employer (and sometimes from members) and transfers from Members’ other pension schemes (which will be in the form of cash and/or acceptable assets).
Further contributions can be made as and when required. The Trustees invest the funds prudently (as required under trust law) to try to achieve growth in the form of, for example: interest, dividends, income (such as rent from leasing commercial property to a tenant) and capital growth.
The value of a Member’s interest, or ‘share’, in the SSAS fund will depend on the contributions and/or transfers paid in by, or for them, their share of any investment growth (or loss) and any relevant payments made from the SSAS for them (e.g. lump sum and pension payments and partial transfers to other pension schemes).
If Members are to share in the overall performance of the investments in the SSAS fund, each Member’s share at any time will be a certain percentage of the entire SSAS fund. Alternatively each Member’s share can be linked to the performance of particular investments but this would require the agreement of all Member Trustees and recorded in a Trustees’ resolution.
The amount of the benefits that a member can receive will depend on the value of their share of the SSAS fund at the time they decide to take benefits. Dentons will advise the Trustees of the value of each Member’s percentage share of the SSAS fund in the Member’s Annual Statement.
Although they share some similarities, Dentons SSAS and SIPP have different legal structures and investment options. As noted above, a SSAS is an occupational pension scheme and it is created using a bespoke package of documents specific to that individual employer.
On the other hand, the Dentons SIPP, is a self-invested personal pension, which has several thousand Members, each of whom has an individual fund which is legally ring-fenced from all other Members.
In addition, each SIPP Member has a SIPP bank account opened specifically for their SIPP, whereas with a Dentons SSAS, one bank account is opened for the scheme as a whole (including multiple Member schemes).
There are also some differences in terms of investments that can be made; for example, SSAS loans to employers.
A person eligible for membership of the Scheme shall become a Member by invitation from the Trustees. Every employee, ex-employee, officer or ex-officer of a sponsoring employer might be eligible for membership of the Scheme.
A SSAS is an occupational pension scheme established by an employer for the benefit of selected directors/employees. Whilst in theory a SSAS could be created by a partnership or an LLP, it could only include employees of the partnership/LLP and not the partners.
This usually means that the individuals who wish to be included in the SSAS cannot actually be included because they are not employees of the entity that has created it.
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.
We recommend that each member is a Trustee of the Scheme 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.
If required, a SSAS can have multiple sponsoring employers. There must be links between the various companies that wish to participate in the same SSAS.
These can include common shareholding/common directorship and any company wishing to participate in the SSAS must make contribution(s) to it in order to justify their inclusion/participation in the scheme.
A SSAS does not need a Professional Trustee, but each SSAS requires a Scheme Administrator (an official role required by HMRC for Registered Pension Schemes). However, having a Professional Trustee involved in a SSAS can be helpful to the Member Trustees, who can benefit from the Professional Trustee’s knowledge and expertise to make sure that the SSAS is administered correctly in accordance with legislative and HMRC requirements.
Where we are establishing a new SSAS, we require that Denton & Co. Trustees Limited is a co-trustee and it will be co-owner of the SSAS assets.
The Member Trustees and Denton & Co. Trustees Limited will together be the ‘Scheme Administrator’ for HMRC purposes. To be appointed as Scheme Administrator, each Trustee will need to qualify as a ‘fit and proper person’.
The Scheme Administrator’s role is (among other things) to:
- register the scheme with HM Revenue & Customs (HMRC)
- report events relating to the Scheme and the Scheme Administrator to HMRC
- make returns of information to HMRC
- provide information to Scheme Members and others regarding the lifetime allowance, benefits and transfers
- generally undertake such other tasks so as to maintain the beneficial tax status of the SSAS.
A SSAS Practitioner is an individual or company that usually provides a guidance-only service to the Member Trustees.
It does not normally become co-trustee, joint Scheme Administrator and joint signatory to the SSAS Trustee bank account and does not take on the responsibilities that these roles entail.
Opening a SSAS
Before applying for a Dentons SSAS, it is important to note that HMRC requires that all parties appointed as the Scheme Administrator for the purposes of the pension tax legislation, are able to declare themselves as a ‘fit and proper’ person.
HMRC can refuse to grant a new SSAS registered status if it believes the Scheme Administrator is not a ‘fit and proper’ person and can withdraw the SSAS registered status if it has reason to believe that any of the parties making up the Scheme Administrator do not meet the criteria.
To find out the process of establishing a new SSAS read/complete our documents:
There are usually two types of Trustees:
- Member Trustees – these Trustees are responsible for the day to day running of the SSAS and for all the investment decisions. All Members are initially appointed as Member Trustees by the sponsoring employer, in addition to the Professional Trustee.
- Professional Trustee - Denton & Co. Trustees Limited will act as the Professional Trustee and will be a party to all investments made by the Trustees.
The main roles of the Professional Trustee are to assist the Member Trustees in running the SSAS in accordance with the governing Trust Deed and Rules and HMRC requirements, to be a party to all Trustee investment transactions and to be a co-signatory on all Trustee bank accounts.
The Member Trustees and the Professional Trustee will together be the ‘Scheme Administrator’ for HMRC purposes. and must be 'fit and proper' persons'.
A key part of the process to establish a SSAS is to register it with HMRC. This can take several weeks or months. There can never be any guarantee that HMRC will accept and register a Scheme, following its checks on the employer that is creating the scheme.
Two professionals have a flourishing design business. They work long hours and don’t have much time to think about pensions.
Their past tax allowances have dried up and they’re now facing their first corporation tax bill.
Having debated all the alternatives, they decide to pay £80,000 into a SSAS and invest the whole sum in a high-yield bank account. Next year, as Trustees of the SSAS, they will lend £40,000 back to the company on commercial and secured terms so that the company can purchase computer equipment.
The remaining £40,000, plus interest, will be invested in a balanced portfolio of collectives, managed by their investment expert.
They will save corporation tax (as shown in the table below), finance their equipment purchase and start building up a balanced retirement fund for the future.
|With a SSAS
|Without a SSAS
|Profits before tax
Corporation tax @19%
|Pension scheme assets:
Loan to company
|Total retained assets
*Corporation Tax 2023 main rate
Each SSAS is a bespoke pension scheme created specifically for an employer. Please see the headline fees illustrated below:
The establishment fee will be billed to the company which is establishing the scheme
|The following work is included in the Establishment fee:
£170 per hour
£290 per hour
For a full list of the services undertaken as administration and consultancy services, please see the SSAS Terms of Business. The charges applied will depend on the number of members in the Scheme, assets held and whether benefits are taken.
Yes, a SSAS can make loans to the sponsoring employer, provided five key criteria can be satisfied:
- maximum loan amount is 50% of the net value of the assets less any existing loans to sponsoring employers. The loan can be used for most purposes including cash flow and funding company acquisitions.
- maximum term of the loan is 5 years
- repayments must be in equal amounts of capital and interest in each year of the loan term and can be paid either monthly or quarterly.
- the interest rate must be at least 1% above the average of the basic lending rate of six leading high street banks. The loan interest, which is allowable as a business expense for tax purposes, is paid back into the scheme.
- loan must normally be secured by way of a first charge on commercial property.
Yes, a SSAS can make loans to unconnected UK limited trading companies, but certain criteria must be met. Dentons will only accept secured loans up to a maximum of 95% of the net asset value of the SSAS, provided it is secured by a first charge on property with a loan to value (LTV) of no more than 70%. Dentons requires a minimum fund size of £60,000 and at least £5,000 left in the SSAS default bank account.
We designed the Dentons SSAS to provide the Member Trustees with investment flexibility from an extensive range of potential investments. We will consider most investments, but there are some we do not allow.
Please download a copy of our Permitted Assets to find out more:
We would recommend that the Member Trustees seek financial advice before making any investment decisions. Dentons will not provide advice on the suitability of assets however, we reserve the right to refuse to hold any proposed investment.
Please note: If the Member Trustees are considering higher risk investments they must complete the relevant Investment Questionnaire.
A SSAS can accept transfers for Members from the other registered pension schemes which will be added to their share of the SSAS fund, enabling consolidation under the SSAS.
Members should seek professional financial advice as to the suitability of a transfer. In the case of a transfer from a defined benefit (final salary) registered pension scheme, they must obtain and provide evidence of such suitable advice.
Transfers are not allowed from a defined benefit unfunded public sector scheme (e.g. the Teachers Scheme, the Civil Service Scheme, the NHS Scheme and the Police, Firefighters and Armed Forces Schemes).
There is no tax relief on a transfer from a registered pension scheme and they do not count towards the annual allowance.
Potential advantages of transferring to a SSAS:
- consolidate pensions into a single scheme
- reduce administration and costs
- wide range of investment opportunities
- control over the investment strategy and investments
- wide range of retirement benefit options
- flexible death benefits.
You can make one-off or regular payments into your SSAS to take advantage of the generous tax benefits available to you at any time.
Sponsoring employers, Members and third parties can contribute to the SSAS. Third party contributions are treated as Member contributions. Contributions can be paid on a regular or one-off basis.
Employer contributions are paid gross and although there is no specified limit on the amount an employer can pay in, it is taken into account for the purposes of a Member’s relevant annual allowance. A sponsoring employer will only get full tax relief for its contributions as a business expense if its local Inspector of Taxes accepts that the expense is incurred ’wholly and exclusively’ for the purposes of the employer’s trade or profession.
A sponsoring employer can only pay contributions for Members who are its employees or ex-employees. Such Members can make arrangements with their employer for part of their employed earnings to be given up and paid to the SSAS as an employer contribution. This is known as ‘salary sacrifice’ and Members who wish to pursue this should speak to their employer and/or consult a financial adviser.
The maximum Member contributions in any tax year are restricted to the greater of:
- £3,600 gross and
- 100% of relevant UK earnings which are chargeable to income tax for that tax year.
Unless a SSAS registers for Relief at Source with HM Revenue & Customs (HMRC), Members would need to claim tax relief on their contributions via their self-assessment tax return.
The total gross amount of all contributions (including those from a sponsoring employer) to the SSAS and any other registered pension schemes in that tax year, must not exceed a Member’s available annual allowance, money purchase annual allowance or tapered annual allowance, as applicable.
If a Member has enhanced protection or fixed protection 2012, 2014 or 2016 in relation to the lifetime allowance, any contribution that is paid to the SSAS (or any other registered pension schemes) by or for a Member will lead to the loss of that protection.