What are the benefits of holding commercial property in a SSAS?

A Small Self Administered Scheme (SSAS) is a pension scheme that is set up as a trust with twelve or fewer members. The SSAS trust can be run by an accountant as scheme administrator, or by another independent professional with comprehensive knowledge of the UK tax system.

Why you might wonder is it more advantageous to buy commercial property through a SSAS rather than invest personally, or buy it through a limited company or individually invested self-invested personal pensions (SIPPs)?

There are three main reasons why SSAS trusts are attractive: income tax and inheritance tax benefits and security of the asset(s).

A slight dampener is that Capital Gains Tax and Stamp Duty and Land Tax are legitimate concerns, but still, SSAS is worth looking into for all owner-managed limited companies. Here are five reasons why:

1. Ownership

In order to attract the exemption under the Pension Acts and Department of Work and Pensions legislation, all SSAS members are trustees and all decisions on investments must be agreed unanimously. Investments are held severally in the name of all trustees and no specific asset can be allocated to any one member.

2. Simplifies matters (more than a SIPP)

Ownership of commercial property in a SSAS is more straightforward than owning property between three or four self-invested personal pensions (SIPPs). With SSAS there is only one registration and legal costs will be less.

3. A tax planning opportunity ? joining family members

The SSAS can be used as a family trust with children and other beneficiaries as members. Directors of a company who are members of the SSAS can enrol family members in the scheme irrespective of their employment status providing it was established by a company for the benefit of one of its employees.

4. Protected

No one can predict the future or know what the economic climate will be in the next five, ten or fifteen years. Securing assets long-term for the future is a wise investment. As the SSAS is a trust, assets held within it are free from any creditors’ claims.

5. Capital Gains Tax Benefits

As the SSAS is a tax-free environment, some trusts capitalise on the “latent value” of commercial property by gaining planning permission or developing the site.

6. Corporation Tax Benefits

There are two big advantages:

• Commercial property moved from a company into a SSAS via an in-specie contribution is an allowable expense, and could remove all liability for corporation tax in the year of the transaction if the contribution exceeds the company’s profit in that year, which that could be rolled back to the previous year to create a corporation tax refund. But this must be carried out to the letter to avoid being taxed on the investment because you don’t meet the conditions.
• The limited company pays rent to the SSAS and this is an allowable expense.

7. Personal Tax Benefits

If the property is moved into the SSAS, the rent from it will not be taxed as it would if the property was owned by the company or a director. The rent from the company to the SSAS will increase the members’ pension fund; then after age fifty-five, members can draw from it, receiving the first 25 per cent tax-free.

Are you interested in moving commercial property to a SSAS?

Setting up a SSAS can be an excellent pension- and tax-planning strategy, which can help your pension fund as much as your business. Please get in touch to find out more.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.