SSAS & SIPP Flashcards
SSAS loan exmaple:
Ltd company, the directors want to buy the premises but require £200,000.
Using their SSAS which is worth £150,000 they are able to pool their pensions together and lend 50% of net scheme assests (£75,000)
The premise can now be purchased and is now the pension, the premise can be sold or rented to increase the pension again.
If the premise is sold and has increased in value, there are no additional fees as no Capital Tax Gains on a SSAS
SSAS borrowing example
Company needs to provide equipment to staff due to working from home.
A SSAS with 3 directors pull together their pensions worth £300,000.
Can borrow up to 50% of scheme assests and reduce pension by £100,000 (Now worth £200,000)
What is a ‘SSAS’?
Small self-administered schemes. Often owner-managed businesses set these up.
Can make loans to the company and non-connected individuals but not members / connected parties.
Can borrow money.
How many memebers are required for a SSAS?
Less than 12 members (11) and at least 1 member has to be ‘connected’ to the firm.
What’s the minimum rate of interest that a Small Self-Administered Scheme (SSAS) must charge a sponsoring employer on any loan?
A. 0%.
B. 1% above base rate of the six major banks.
C. 2% above base rate of the six major banks.
D. 5% flat rate.
B. 1% above base rate of the six major banks.
Any loan taken from a SSAS must have interest payments that are at least 1% above the base rate set by the six major banks.
What is a SIPP?
A Self-Invested Personal Pension (SIPP) is a type of pension that lets you choose your own investments and from a much wider range than other pensions.
Organised by an indiviudal and not an employer.
Hari has a Self-Invested Personal Pension Plan with a fund value of £200,000. He would like to take a loan over the next 5 years from the plan to help acquire new plant and machinery for his company. The maximum he could borrow is
A. £0
B. £50,000.
C. £100,000.
D. £200,000.
A. £0
No loans available from a SIPP
Can a SSAS lend money?
Yes.
A SSAS can loan and borrow money.
- For less than 5 years
- Repaid by equal installments
- Secured on company assets
Can a SIPP lend money?
No, a SIPP cannot lend money but can borrow money.
Who regulates a SIPP?
The FCA.
This is due to as SIPP being a personal pension scheme.
Who regulates a SSAS?
The Pension Regulator (TPR)
This is due to a SSAS being an occupational scheme.
A company is considering selling their commercial property that they acquired through a Self-Invested Personal Pension (SIPP) a number of years ago. If the value of the property has risen from £200,000 to £300,000 whilst in the SIPP, what would be considered the gain for Capital Gains Tax purposes?
A. £300,000.
B. £200,000
C. £100,000.
D. £0
D. £0
No Capital Gains Tax on property gains, no income tax on property rent received.
What is the amount a SSAS can loan/borrow of net scheme assets?
50% of the value of the net scheme assets.
ABC PLC are sponsoring employers of a Small Self-Administered Scheme (SSAS). They are considering taking a loan from the SSAS to help fund the acquisition of new machinery. Were they to do so, what is the maximum term that the loan can be agreed over?
A. 5 years
B. 10 years
C. 25 years
D. There is no maximum term.
A. 5 years
Maximum loan on a SSAS is 5 years. Must be capital & interest repayment and interest at least 1% above base rate of the 6 major banks
What is the maximum amount that can be borrowed by a Self-Invested Personal Pension (SIPP) that is looking to fund a commercial property purchase?
A. SIPP cannot borrow money, it can only lend.
B. 50% of net scheme assets
C. 100% of net scheme assets
D. There is no maximum, it is based on affordability.
B. 50% of net scheme assets
A SIPP is a type of:
A. Occupational Pension Scheme
B. Defined Contribution Pension Scheme
C. Defined Benefit Pension Scheme
D. Stakeholder Scheme
B. Defined Contribution Pension Scheme
