Small Self Administered Schemes (SSAS).

This type of scheme gives company directors a powerful pension arrangement. It can be utilised to allow profitable companies to gain corporation tax relief, give directors greater flexibility and control over investments. For more profitable companies, the scheme can be used to raise finance for example to aid expansion: -

• The scheme borrows from a bank up to 50% of the scheme’s value e.g. to purchase a commercial property:

Scheme Value: 500,000

Maximum Loan: 250,000

Maximum Purchase Price: 750,000

• Alternatively the company borrows from the scheme up to 50% of the scheme’s value. This can include assets transferred in from previous schemes (excluding protected rights benefits accrued through NIC rebates). Scheme loans to the company must be for development purposes only e.g. R&D, Acquisitions.

Existing Scheme Assets 500,000

Other scheme assets 100,000 (to be transferred to SSAS)

Total assets 600,000

Maximum Loan to Company: 300,000

Security: It is an HMRC requirement that scheme loans to the company must be on full commercial terms and secured on a first charge basis. Whilst this is typically on ‘bricks and mortar’ certain pension trustees will accept a ‘floating charge’.

High Company Contributions

To facilitate larger transactions, if structured in a certain manner, company contributions well in excess of the Governments annual allowance (235,000 for tax year 08/09) could be made in any one company financial year and with full tax relief.

Fundamentally such a scheme is established to maximise the retirement benefits for the directors/members. Any formal recommendation would be subject to HFMC’s thorough analysis of the company’s position and any proposed transaction is firmly within HMRC guidelines.