The Power of SSAS Pensions for Property Investors

As a property professional, you’re always on the lookout for effective ways to maximise your returns while minimising costs and taxes. Enter the SSAS pension – a game-changer in the property investment world. A Small Self-Administered Scheme (SSAS) is a company pension designed for small to medium-sized businesses. It’s an incredibly flexible tool that offers numerous benefits, particularly for those in the property sector. Here are seven key advantages of SSAS pensions for property investors and developers.

1. Access to Low-Cost Finance

One of the most compelling benefits of a SSAS is its ability to provide low-cost finance to your business. This is possible through a feature known as a ‘SSAS Loanback’. Essentially, your SSAS can lend up to 50% of its value back to your company for any genuine business purpose, including property investments. This loan comes at a remarkably low interest rate – typically just 1% plus base rate. Imagine bypassing the lengthy negotiations with traditional finance companies and accessing funds quickly to secure that perfect property deal. This can significantly reduce your finance costs and accelerate your investment plans.

2. Business Synergy and Flexibility

A SSAS integrates seamlessly with your property business, providing the flexibility to support various investment strategies. Whether you’re looking to purchase commercial premises, engage in property development, or even diversify into new business ventures, a SSAS can facilitate these activities. You can buy a property to rent back to your business, effectively creating a tax-free home for rent and growth. Additionally, you can lend money to other property professionals, becoming a ‘bank’ for your peers and fostering strong industry relationships.

3. Control Over Your Pension Wealth

With a SSAS, you gain full control over your pension funds, unlike traditional pension schemes where your money is managed by third parties. You can transfer existing pensions into your SSAS, consolidate your pension wealth, and decide how and where to invest it. This control allows you to align your pension investments with your business goals and take advantage of opportunities as they arise. Moreover, by avoiding high management fees associated with other pension schemes, you retain more of your investment returns.

4. Tax Efficiency

A SSAS is a highly tax-efficient vehicle. Contributions to your SSAS from company profits are tax-deductible, reducing your corporation tax bill. Each person has a £60,000 annual allowance, and many people can also go back 3 full tax years to utilise unused allowances for those years.  The growth within the SSAS is tax-free, and you can take 25% of your pension pot as a tax-free lump sum from the age of 55. Uniquely, SSAS also allows for greater contributions, with highly profitable businesses able to add up to £500,000 annually to the SSAS tax-free.

5. Building a Family Legacy

Additionally, SSAS pensions are not subject to inheritance tax, allowing you to leave a substantial legacy to your children.  A SSAS is not just for you; it’s for your family too. You can include spouses, partners, and adult children as members of the scheme. Beyond the financial benefits, involving family members helps teach them about wealth building and management. They learn first hand how to generate recurring income and diversify the family wealth, ensuring the sustainability of wealth across generations.

6. Mitigating Business Risks

Investing through a SSAS can protect your wealth from business risks, such as insolvency. Since SSAS funds are separate from your business assets, they are safeguarded from creditors if your business encounters financial difficulties. This separation provides a safety net, ensuring your pension wealth remains secure regardless of business challenges. Furthermore, SSAS loans must be secured with a first charge on an asset or business, adding an additional layer of security to your investments.

7. Supporting Ambitious Growth Plans

A SSAS is a powerful tool for ambitious property investors looking to grow their business. It allows you to leverage your pension funds for various property-related activities, from purchasing and developing properties to providing bridging loans. This flexibility can fuel your growth plans and help you achieve your financial goals faster. Additionally, you can collaborate with other SSAS holders, pooling resources and funding larger projects that might be out of reach individually.

Real-World Examples

Case Study 1: Commercial Property Investment

One property professional used their SSAS to purchase a commercial property for their business. Almost immediately, a developer bought the adjacent property and made an irresistible offer to purchase theirs. This transaction resulted in a six-figure gain within the SSAS, showcasing the potential for significant returns.

Case Study 2: Bridging Loan Savings

Another investor utilised the SSAS loanback facility to lend money to their limited property company for purchasing property. This move saved them £26,000 in bridging and interest fees compared to traditional financing options, illustrating the cost-effectiveness of SSAS loans.

Case Study 3: Building a Family Legacy

A family decided to move their pensions into a SSAS to ensure their wealth was protected and could be passed on to future generations. By taking control of their pension and leveraging it for property investments, they were able to build a robust legacy, safeguarding their children’s financial future.

 Conclusion

A SSAS pension offers unparalleled flexibility and control, making it an invaluable tool for property investors and developers. From providing low-cost finance and fostering business synergy to enhancing tax efficiency and protecting your wealth, the benefits are substantial. By incorporating a SSAS into your property investment strategy, you can accelerate your growth, mitigate risks, and create a lasting legacy for your family. If you’re ready to take control of your pension and turbocharge your property business, a SSAS could be the perfect vehicle for you.

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For more information on how to set up a SSAS, reach out to the experts at WealthBuilders. We’re here to help you navigate the complexities and ensure you get the most out of your SSAS pension.

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