Setting Up a SSAS Corporate Pension Scheme: How You Can Grow Your Wealth Tax-Free with easyMoney
This is a financial promotion and is intended to provide information, not investment advice.
What is a SSAS Corporate Pension Scheme?
A Small Self-Administered Scheme (SSAS) is an occupational pension scheme set up by a company, primarily for its directors, shareholders, and senior employees. The primary appeal of a SSAS lies in its flexibility and control, allowing its trustees (usually company directors) to decide how to invest the pension fund.
Unlike traditional pensions, a SSAS enables businesses to invest pension funds in a wide variety of assets, including:
- Commercial property
- Shares in private and public companies
- Loans to the sponsoring company
- P2P loans through regulated platforms
- Unit trusts and investment funds
Benefits of Setting Up a SSAS
SSAS pensions offer numerous benefits, making them an attractive option for business owners. Here are the key advantages:
1. Tax-Efficient Contributions
Contributions made by the company to a SSAS are tax-deductible, reducing the business's taxable profits. This provides immediate tax relief. Additionally, contributions made by individuals are eligible for personal tax relief.
2. Tax-Free Growth
One of the most significant advantages of a SSAS is that the investments made by the pension grow free from income tax and capital gains tax. This allows the pension fund to grow faster than if the same investments were made outside a pension scheme.
3. Loan-Back Facility
SSAS offers a unique feature called the loan-back facility, allowing the SSAS to lend up to 50% of its total value back to the sponsoring company. This loan can be used for various purposes, including business expansion, purchasing assets, or improving cash flow. The loan must be secured and repaid with interest, which goes back into the pension fund, making this an effective way to both fund the business and grow the pension.
4. Commercial Property Purchase
With a SSAS, the pension scheme can purchase commercial property, including the business’s own premises. This provides an additional income stream (via rental payments) for the pension fund while freeing up company cash that would otherwise be tied up in property. The rental income is paid into the SSAS tax-free, and any capital gains on property appreciation are also free from capital gains tax.
5. Investment Flexibility
A SSAS offers far greater investment flexibility than most pension schemes. It allows trustees to invest in a wide range of assets, from commercial property to private equity and even peer-to-peer (P2P) lending. This flexibility allows businesses to tailor the investment strategy to suit their growth plans and risk appetite.
How easyMoney Can Help Grow Your SSAS Pension
When considering how to invest your SSAS funds, easyMoney’s property-backed P2P lending platform offers an attractive option for SSAS trustees looking for higher returns with the added security of property.
Here’s how easyMoney can complement your SSAS investment strategy:
1. Property-Backed Loans
At easyMoney, every loan is secured against UK property, adding a level of security to the investment. Property-backed loans offer a robust safeguard for SSAS trustees looking to grow their pension while mitigating risk. In the event of a borrower default, the property serves as collateral, providing peace of mind for investors.
2. Competitive Interest Rates
One of the most significant advantages of investing through easyMoney is the potential to earn higher returns than traditional savings or investment accounts. While interest rates vary depending on the type of loan, easyMoney’s platform offers interest rates of up to 10% per annum (as of September 2024), significantly outperforming other corporate savings rates.
3. Regular Monthly Returns
Unlike many investments that lock up capital for extended periods, easyMoney offers monthly interest payments. This regular income can be reinvested into the SSAS, allowing the pension fund to grow further and providing added flexibility for long-term financial planning.
4. Diversification Opportunities
Diversification is critical to any successful investment strategy, and easyMoney allows SSAS trustees to spread their investments across multiple property-backed loans. By investing in different sectors and regions, you can reduce the impact of a single loan default or market fluctuation, making it easier to protect your pension fund.
Steps to Set Up a SSAS Pension
Setting up a SSAS requires a few critical steps, but the flexibility and potential for tax-efficient growth make it a worthwhile endeavour. Here’s how the process typically works:
1. Appoint Trustees
A SSAS is run by trustees, typically the company directors or senior employees. As trustees, they are responsible for managing the scheme and making investment decisions. Professional pension administrators can also be appointed to assist with the management and regulatory aspects of the SSAS.
2. Register with HMRC
The SSAS must be registered with HM Revenue and Customs (HMRC) to receive tax benefits. Once registered, the SSAS can accept contributions and benefit from the tax advantages mentioned earlier.
3. Create an Investment Strategy
The SSAS trustees, with the help of financial advisers if needed, will develop an investment strategy tailored to the company’s financial goals. This strategy should consider the company’s need for liquidity, risk tolerance, and the desire for long-term growth.
4. Make Contributions
Once the SSAS is set up, the company can start making tax-deductible contributions to the pension. These contributions can be cash or assets, including shares or property.
5. Begin Investing
The SSAS trustees can then begin investing the pension funds for the scheme members. With easyMoney, the process is straightforward. After setting up a corporate account, you can choose how much to invest in property-backed loans and start earning monthly returns.
Managing the Risks
While a SSAS pension scheme offers significant benefits, it is crucial to manage its risks effectively:
1. Investment Risk: Diversify across various asset classes, such as property and loans, to reduce exposure to market fluctuations that could affect the pension fund’s value.
2. Liquidity Risk: Maintain a balance between liquid assets and long-term investments, ensuring the fund has sufficient liquidity to meet obligations when needed.
3. Compliance: Ensure the scheme complies with HMRC regulations to avoid penalties, particularly around loan limits and use of pension funds.
4. Business Risk: If loaning funds to the sponsoring company, ensure the loan is secured and the company has a strong repayment plan.
By diversifying investments, maintaining liquidity, and adhering to regulations, trustees can effectively manage risks while growing the SSAS tax-efficiently.
Why Choose easyMoney for Your SSAS Investments?
easyMoney offers a unique combination of security, flexibility, and high returns, making it an ideal investment platform for SSAS trustees. Here’s why easyMoney is the right choice for growing your corporate pension:
- Property-Backed Security: All loans are secured against UK property, offering peace of mind for investors.
- No Hidden Fees: easyMoney operates transparently, with no hidden fees or surprise charges, ensuring that you keep more of your returns.
- Tax-Free Growth: By investing through your SSAS, all interest earned through easyMoney remains tax-free, helping your pension fund grow faster.
Conclusion
Setting up a SSAS Corporate Pension Scheme is one of the most effective ways to grow your business wealth while enjoying significant tax advantages. With its flexibility, tax-free growth, and the ability to invest in a wide range of assets, a SSAS offers companies a powerful financial tool for long-term growth.
By incorporating easyMoney’s property-backed loans into your SSAS investment strategy, you can diversify your pension investments, earn higher returns, and benefit from the security of UK property. Whether you’re looking to grow your business or build a secure pension for retirement, easyMoney can help you achieve your financial goals.
Take the next step towards tax-free pension growth with easyMoney. Register for a corporate account today and explore the opportunities that a SSAS, combined with easyMoney, can offer.
Past performance is no guarantee for future results.
Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future.