SSAS pensions: using a Small Self-Administered Scheme to buy commercial property

A Small Self-Administered Scheme is an occupational pension scheme set up by a company for its directors and senior employees, who are usually also the trustees. A SIPP is a personal pension. A SSAS is linked to a sponsoring employer, so it can lend to that employer and can invest in its business in ways a SIPP generally cannot, within strict HMRC limits.

Yes, this is one of its main uses. The scheme buys the premises, perhaps from your company or a third party, and your company pays rent to the scheme at a market rate. The rent is not subject to income tax inside the scheme, and the company may deduct the rent as a business expense. Terms must be commercial and documented.

Not without heavy tax charges. Direct or indirect investment by a registered pension scheme in residential property is a taxable property investment, treated as an unauthorised payment, with tax charges on the member and the scheme administrator, and on income and gains. SSAS property investment is therefore normally limited to commercial property such as offices, warehouses and workshops.

A loan to the sponsoring employer is permitted only if it meets HMRC conditions: it lasts no more than five years, carries interest at least 1% above the average base lending rate of leading high street banks, is secured by a first charge on assets worth at least the loan plus interest, is no more than 50% of net scheme assets, and is repaid in equal annual instalments.

A loan that fails the conditions is an unauthorised payment, with tax charges that can fall on the company, the trustees and the scheme administrator. Borrowing by the scheme above the 50% limit attracts a 40% scheme sanction charge on the excess. This is why every loan needs documented terms, security and repayment, and why we review them before they are made.

Yes, within limits. A registered pension scheme can borrow up to 50% of the net value of its assets, measured immediately before the borrowing. Anything above that attracts a tax charge. Lenders for pension property are specialist, and the loan must be limited to the right purpose. Rental income and growth of the property remain inside the pension wrapper.

The annual allowance is £60,000, including employer contributions, and tax relief on your own contributions is limited to the greater of £3,600 and your relevant UK earnings. A taper reduces the allowance for high earners. Company contributions are normally deductible for corporation tax if they are wholly and exclusively for the trade. Unused allowance may be carried forward in some cases.

From 6 April 2027, most unused pension funds and death benefits will count towards the estate for inheritance tax, whether or not the scheme has discretion over payment. Personal representatives, not scheme administrators, report and pay the tax. Benefits passing to a spouse or civil partner or to charity stay exempt, and death-in-service benefits are excluded.

No, but it changes the thinking. Before, many people used a pension to pass on wealth outside the estate; that will largely end for deaths from April 2027. A SSAS can still be valuable for what it offers during your lifetime: tax relief, tax-free rent and growth, and funding a business's premises. We review each plan with the new rules in mind.

Dealings with the sponsoring company need to be at arm's length, on commercial terms. A sale at an undervalue or at an inflated price can be an unauthorised payment. Loans back to the employer must meet the five conditions. Careful valuations, advice from the scheme administrator and good minutes are all essential.

A registered pension scheme must have a scheme administrator, which is the person responsible to HMRC, and in practice a specialist SSAS firm usually carries out the role. ASWATAX advises on the tax and works alongside your scheme administrator and financial adviser. We do not give regulated investment advice or recommend a pension product.

SDLT applies as normal to the scheme's purchase, at non-residential rates for commercial property: 0% to £150,000, 2% up to £250,000 and 5% above. VAT may apply if the building is opted to tax, and the scheme may need to opt and register. Scheme borrowing and the lender's terms add to the planning. Get the numbers in advance.

It can be, because holding the premises in a SSAS separates them from the trading company, which can make the company easier to sell and keep the property for the pension. The buyer may take a lease. However, a lease to a new owner has a risk, and the property in the scheme is not freely accessible until you reach pension age.

Benefits can generally be taken from the normal minimum pension age, with up to 25% as a tax-free lump sum subject to the lump sum allowances, and the rest taxed as income when drawn. A SSAS holding property may need to sell or borrow to fund benefits, so liquidity needs planning. We recommend checking current allowances with your administrator before relying on figures.

Often yes, by transferring from a personal pension or SIPP, though the receiving scheme must accept it and old schemes may have exit charges or guarantees you would lose. This is where independent regulated advice is important, and we leave that to your financial adviser. We help by testing the tax outcome of the property plan.