Small Self Administered Scheme

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).

SSAS registered with HMRC may enjoy tax-exempt status, all investments made will be free of Capital Gains Tax, 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. However, it should be noted that the vast majority of SSAS do not reclaim tax on members contributions as this would require the scheme Trustee / Administrator applying for Relief at Source via HMRC.

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.

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 – a process known as pension-led funding. 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.

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Wikipedia