Small Self Administered Scheme
Encyclopedia
Small Self Administered Scheme (SSAS) is a type of UK Occupational Pension Scheme.
Schemes are trust-based and established individually, usually by directors of limited companies for specified employees of the company. Since Pension Simplification
(also known as A-Day), SSAS has been available for establishment by those who are not in a limited company (i.e. Partnerships and Families).
, but investments made within the SSAS may be. Instead, a SSAS must be registered with HM Revenue & Customs in order to achieve tax-exempt status.
The Pensions Regulator is the regulatory body for SSAS, since SSAS are employment based schemes.
, and contributions to the SSAS will receive tax-relief (if contributions are made by a "Relevant UK Individual"). Basic rate tax relief can be claimed by the SSAS itself, and any higher rate tax would be claimed through the member's tax return
.
The sponsoring employer can also pay contributions to the scheme and may obtain tax relief on the contributions.
Tax relief on personal contributions is calculated at the person's marginal rate of income tax, and for company contributions it is calculated as the company's marginal rate of corporation tax. Third party contributions may be made in some circumstances.
The trustees can invest the funds as they consider appropriate to the needs of the SSAS pension scheme. For example, the trustees can invest the assets of the pension scheme in the company that sponsors the SSAS pension scheme. This can take the form of loans to the employer and the purchase of shares in the sponsor, however, there are limits that apply.. One must be very careful purchasing shares in the company through a SSAS, 'Taxable moveable property' laws can easily be breached. Guidance from the SSAS Practitioner or Administrator is required.
SSAS are suited to groups of individuals who run a common businesses and wish to have complete control over the pension fund. The costs per member are usually lower than using individual SIPPs to pool funds to purchase commercial property. SIPPs do not have the facility to loan funds to associated or unassociated employers. There is no requirement for a professional to be appointed to the scheme, however, the rules are complex and may well prove difficult for individuals without experience running SSAS.
The Trustees may wish to appoint a professional company to assist with the management of the scheme. This company may operate as SSAS Practitioner or as the Scheme Administrator. They both carry out the tax returns and other such submissions to HMRC and the Regulator. If the scheme returns are not correctly undertaken a penalty can be assessed against the trustees of the pension scheme
If a scheme Administrator is appointed to run the scheme, they are usually co-signatory on the scheme's investments. A SSAS Practitioner will not be co-signatory, this leads to Trustees and beneficiaries of the scheme having far greater control over their pension assets and enables the scheme to run more efficiently.
. The Trustees of the SSAS may make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of, subject to the unanimous agreement of all trustees.
The range of assets permitted by HMRC includes :
Investments currently permitted by primary legislation but subsequently made subject to heavy tax penalties include :
Schemes are trust-based and established individually, usually by directors of limited companies for specified employees of the company. Since Pension Simplification
Pension simplification
Pension tax simplification, often simply referred to as "pension simplification" and taking effect from A-day in 6 April 2006 was a policy announced in 2004 by the Labour government to rationalise the British tax system as applied to pension schemes...
(also known as A-Day), SSAS has been available for establishment by those who are not in a limited company (i.e. Partnerships and Families).
Regulation
SSAS is currently not regulated by the Financial Services AuthorityFinancial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
, but investments made within the SSAS may be. Instead, a SSAS must be registered with HM Revenue & Customs in order to achieve tax-exempt status.
The Pensions Regulator is the regulatory body for SSAS, since SSAS are employment based schemes.
Tax relief
SSAS registered with HMRC may enjoy tax-exempt status, all investments made will be free of Capital Gains TaxCapital gains tax
A capital gains tax is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property...
, and contributions to the SSAS will receive tax-relief (if contributions are made by a "Relevant UK Individual"). Basic rate tax relief can be claimed by the SSAS itself, and any higher rate tax would be claimed through the member's tax return
Tax return (United Kingdom)
In the United Kingdom, a tax return is a document that must be filed with the HM Revenue & Customs declaring liability for taxation. Different bodies must file different returns with respect to various forms of taxation...
.
The sponsoring employer can also pay contributions to the scheme and may obtain tax relief on the contributions.
Tax relief on personal contributions is calculated at the person's marginal rate of income tax, and for company contributions it is calculated as the company's marginal rate of corporation tax. Third party contributions may be made in some circumstances.
Ownership
Provided that the members of the SSAS pension scheme are also trustees, there is a lesser regulatory requirement than if all members were not trustees. This is because the members of the SSAS pension scheme are deemed to be investing the funds for themselves.The trustees can invest the funds as they consider appropriate to the needs of the SSAS pension scheme. For example, the trustees can invest the assets of the pension scheme in the company that sponsors the SSAS pension scheme. This can take the form of loans to the employer and the purchase of shares in the sponsor, however, there are limits that apply.. One must be very careful purchasing shares in the company through a SSAS, 'Taxable moveable property' laws can easily be breached. Guidance from the SSAS Practitioner or Administrator is required.
SSAS are suited to groups of individuals who run a common businesses and wish to have complete control over the pension fund. The costs per member are usually lower than using individual SIPPs to pool funds to purchase commercial property. SIPPs do not have the facility to loan funds to associated or unassociated employers. There is no requirement for a professional to be appointed to the scheme, however, the rules are complex and may well prove difficult for individuals without experience running SSAS.
The Trustees may wish to appoint a professional company to assist with the management of the scheme. This company may operate as SSAS Practitioner or as the Scheme Administrator. They both carry out the tax returns and other such submissions to HMRC and the Regulator. If the scheme returns are not correctly undertaken a penalty can be assessed against the trustees of the pension scheme
If a scheme Administrator is appointed to run the scheme, they are usually co-signatory on the scheme's investments. A SSAS Practitioner will not be co-signatory, this leads to Trustees and beneficiaries of the scheme having far greater control over their pension assets and enables the scheme to run more efficiently.
Investment choice
The investments allowable for a SSAS are very similar to a SIPPSelf-invested personal pension
A Self-Invested Personal Pension is the name given to the type of UK-government-approved personal pension scheme, which allows individuals to make their own investment decisions from the full range of investments approved by HM Revenue & Customs ....
. The Trustees of the SSAS may make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of, subject to the unanimous agreement of all trustees.
The range of assets permitted by HMRC includes :
- Stocks and shares listed on a recognised exchange
- Futures and options traded on recognised futures exchange
- Authorised UK unit trustUnit trustA unit trust is a form of collective investment constituted under a trust deed.Found in Australia, Ireland, the Isle of Man, Jersey, New Zealand, South Africa, Singapore, Malaysia and the UK, unit trusts offer access to a wide range of securities....
s and OEICs and other UCITS funds - Unauthorised unit trustUnit trustA unit trust is a form of collective investment constituted under a trust deed.Found in Australia, Ireland, the Isle of Man, Jersey, New Zealand, South Africa, Singapore, Malaysia and the UK, unit trusts offer access to a wide range of securities....
s that don't invest in residential property - Investment trustInvestment trustAn Investment trust is a form of collective investment found mostly in the United Kingdom. Investment trusts are closed-end funds and are constituted as public limited companies....
s subject to FSAFinancial Services AuthorityThe Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
regulation - Unitised insurance fundUnitised insurance fundUnitised insurance funds or unit-linked insurance funds are a form of collective investment offered through life assurance policies.An insurance company's contract may offer a choice of unit-linked funds to invest in. Insurers that offer these contracts are mainly found in the UK and British Isles...
s from EU insurers and IPAs - Deposits and deposit interests
- Commercial property (inc. hotel rooms, with certain restrictions)
- Traded endowment policies
- Derivative products such as a Contract for differenceContract for differenceIn finance, a contract for difference is a contract between two parties, typically described as "buyer" and "seller", stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at contract time...
(CFD) - Gold bullionGold as an investmentOf all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises...
, which is specifically allowed for in legislation nbsp;
Investments currently permitted by primary legislation but subsequently made subject to heavy tax penalties include :
- Any item of tangible moveable property (whose market value does not exceed £6,000) - subject to further conditions on use of property
- other exotic assets like vintage cars, wine, stamps and art
- Residential property