A Directors Small Self Administered Scheme (SSAS) is a pension scheme which provides investment flexibility and scope for Directors to utilise pension funds to use in their business.

Tax Relief

The employer, which is often a Limited Company of which the Director is also a shareholder, can claim 100% tax relief on Employer Pension Contributions. The Director does not pay any tax on the contributions. The ‘annual allowance’ is currently £60,000 as of 2023/24 (this reduces for people with an income exceeding £260,000).

Employer Pension Contributions are not restricted to ‘pensionable earnings’ in the same way that personal contributions are.

You may be able to utilise unused annual allowances for the 3 previous tax years in some circumstances.

Benefits

Tax Relief – As set out above contributions can save substantial amounts of corporation tax.

Investment Flexibility – Unlike many other pension schemes a SSAS can own assets such as commercial property. Including a property which you may use in your own business.

Loans – A SSAS can loan money to the company (up to 50% of scheme funds), subject to some criteria, which can be used for a variety of different reasons.

Inheritance – Assets held in a SSAS can be passed on to relatives and it can be an IHT friendly vehicle (subject to circumstances).

Existing pension pots can be transferred into a SSAS. Risks and costs should always be considered.

Summary

A Directors SSAS can be a useful and flexible pension scheme which can be utilised in a number of business and tax planning scenarios.

Data correct as of 2023/24. This article is intended as an outline guide of the potential benefits of a SSAS, and not a recommendation that any reader should make an investment without taking advice. Other pension schemes are available which may be more suitable for you, and you should always seek specific advice based on your personal circumstances before taking any action.

Author – Ryan Sample ryan@sapphireaccountants.co.uk