Flexible, tax efficient family trust
The Family SSAS is a fantastic way to ensure ultimate tax efficiency. If the plan is to build the legacy, then a SSAS is a fantastic tool, for accruing assets and securing them for future generations.
The Family SSAS
Protecting family businesses and securing family wealth in a tax efficient wrapper.
What is a Family SSAS?
A Family SSAS is a family pension trust, independently established for the benefit of its members. Members of the trust can be family members or also company members. The SSAS is a corporate pension and so regulated by HMRC and The Pensions Regulator, enjoying the same benefits as traditional benefits, plus much more. The Family SSAS pension is controlled by its members and so all investment decisions are at the discretion of the members of the SSAS. In the case of the Family SSAS, this means that the family is responsible for the fund and how the funds are invested. It also means that family assets, such as property and land, can be secured within the SSAS to ensure a legacy for generations to come. For families and small businesses, the Family SSAS is the ideal vehicle for wealth protection and succession purposes.
How does a Family SSAS work?
A Family SSAS must initially be established by a company director and registered with HMRC. Once established, other family members or key company employees may also be invited to join the trust, making it the perfect tool for family run businesses. The Family SSAS may have up to 11 members, who may also transfer in their pension funds if they wish to, creating a larger pooled pot. Members retain the percentage portion of the pot that they put in, as the pot grows. Funds may be invested at the discretion of the members.
Flexibility & control
The Family SSAS is a unique and flexible pension with a very wide range of investment choices. Examples of popular Family SSAS investments include: the family business, commercial property, land, indirectly in residential property, unquoted shares, gilts and bonds, and a much wider range of investment than usually available within traditional pension funds.
The Family SSAS is an asset that can be passed down through the generations and wealth secured. As a pension trust, it is legally protected from creditors. Therefore, it is the ideal way to ring-fence assets for family succession.
What does a Family SSAS mean for you?
- Much more flexibility & control than the traditional pension and retirement planning methods
- Members retain their own portion of the fund and nominate their own beneficiaries
- Assets can be secured within the Family SSAS, which means they are ring-fenced from creditors
- Unlike traditional pensions, the Family SSAS can be passed down through the generations
- All in one trust for investment, security and succession purposes, making it easier to manage and more tax efficient, with increasing growth opportunity and reach
- For family businesses, this adds additional security, flexibility and continuity possibilities, supporting the business as well as the family and member retirement plans
- Cheaper, faster and simpler to manage ownership
- Control over investment choices, which is beneficial both to the family and the business
- The Family SSAS can invest in property, transfer assets and sell assets. This is particularly useful in the case of family businesses, property and land investment and ownership
- Offers the ability to pool pensions for greater investment choice and reach, increased growth potential for all members and still all with in a tax efficient wrapper when it comes to succession
Put simply, the Family SSAS is a unique, tax efficient wrapper that protects your family wealth, allows you to create a robust succession plan for your family business and can benefit your family for many generations to come.
What happens when a Family SSAS member retires?
Should a member of the SSAS retire, their retirement savings within the SSAS can provide the same retirement options as traditional pensions, for example, take a 25% lump sum, secure an income or receive an income from the fund or even choose a combinations of these. Income that is generated by investments the fund has made (for example rent it is receiving from property) can be paid to the retired member as benefits and assets left within the fund. Due to the flexibility of the SSAS, the member can delay retirement or take retirement early, taking income from the fund at the same time as taking a portion of their pension, for example if they continue to work part time.
What happens when a Family SSAS member dies?
The SSAS is an asset that can be handed down through the generations. If a SSAS member dies, beneficiaries can quickly and easily receive benefits and assets. The fund can continue to be held and passed down through the generations, as long as the funds last.
A successful SSAS with long-term investments and strategies can last for many generations, providing valuable benefits and securing assets. Beneficiaries are immediately entitled to draw benefits, regardless of age.
Read more about SSAS death benefits here.
What does a Family SSAS mean for your Family business?
For family businesses, the Family SSAS is the ideal vehicle for ensuring business continuity. Not only does it ring-fence and protect assets within the scheme, it means that a business can be handed down through the generations, avoiding extensive legal fees and arduous paperwork. As part of a long-term strategy, succession planning can include a straight-forward exit plan for older generations as the younger generations move into key positions. Retired members of the family business can continue to live the lifestyle that they desire by using flexible strategies to pay benefits from the SSAS, whilst keeping key assets retained within the scheme. This allows the Family SSAS to continue to grow and continuity to be optimised.
An example of an efficient Family SSAS strategy:
Background:
John and his wife, Jean, are proprietors of a successful company. They have two sons, Tom and Tim, and are focused on planning for their retirement whilst ensuring a seamless transition of the business to their sons.
Strategic Actions:
- Utilising a Small Self-Administered Scheme (SSAS):
- Property Transfer: John and Jean decide to sell their business premises to their SSAS. The company then pays rent to the SSAS for the use of the premises. This rent is considered an allowable business expense, providing tax benefits, and the income received by the SSAS is exempt from income tax, facilitating the growth of the SSAS (i.e. pension funds).
- Profit Reduction: The rental payments reduce the company’s taxable profits, thereby decreasing the year-end tax liability.
- Family Asset Growth: Funds are effectively transferred from the business to the SSAS, ensuring that assets remain within the family.
- Involving the Next Generation:
- SSAS Membership: John and Jean invite Tom and Tim to join the SSAS. This inclusion allows for shared decision-making and prepares the sons for future business responsibilities.
- Retirement Planning:
- Pension Drawdown: Upon retirement, John and Jean opt to draw 25% of their pension fund tax-free, spreading withdrawals over several years to optimise tax efficiency and preserve funds within the SSAS.
- Funding Retirement Benefits: The rent received by the SSAS provides cash flow to support John and Jean’s retirement benefits as needed.
- Enhancing the SSAS Fund:
- Additional Contributions: With John and Jean no longer drawing salaries, the company reallocates funds to make additional contributions into the SSAS on behalf of Tom and Tim, promoting the growth of the pension fund.
- Asset Appreciation: The business premises, now owned by the SSAS, appreciate in value, further increasing the fund’s worth. If the property is sold, the proceeds are free from capital gains tax.
Consideration of Inheritance Tax (IHT) Changes:
Recent legislative changes, brought in by the UK April budget in 2024 and fully effective from April 2027, have impacted the IHT landscape, specifically relating to SSAS pension schemes. Previously, SSAS benefits could be passed to beneficiaries free from IHT. Under the new rules however, death benefits from SSAS will form part of an individual’s estate for IHT purposes. However, speak to our advisers as there are plenty of strategies that can be integrated to overcome these new challenges.
Alternative Strategy: Establishing a Family Investment Company (FIC):
In light of the new IHT implications for SSAS, John and Jean consider establishing a Family Investment Company (FIC) as a complementary strategy, in addition to the SSAS.
- Structure and Benefits:
- Company Formation: A FIC is a private limited company where family members are shareholders. John and Jean can transfer assets into the FIC, such as cash or investments, in exchange for shares.
- Control and Flexibility: As directors, John and Jean retain control over the company’s operations and investment decisions, while gradually passing economic value to Tom and Tim through share distribution.
- Tax Efficiency: The FIC structure allows for potential mitigation of IHT, as growth in the value of the company can be attributed to shares held by the next generation, reducing the taxable estate of the parents. Additionally, corporation tax rates on retained profits within the FIC are generally lower than personal income tax rates.
Conclusion:
By adapting their succession and retirement planning strategies to account for recent IHT changes, John and Jean can effectively manage their estate’s tax liabilities. The establishment of a Family Investment Company offers a viable alternative to the SSAS, providing control, flexibility, and tax efficiency in passing wealth to future generations. It is essential to consult with experienced advisers to tailor these strategies to specific circumstances and ensure compliance with current tax laws.
This is just one example of how the Family SSAS can be used for succession planning, whilst still providing retirement benefits and business growth.
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What our clients say
Recently been working with Tom at the Landlords Pension through a recommendation from a close friend. Tom is very knowledgeable and explained their services very clearly. Really helpful and friendly guy who immediately put me at ease. Always at the end of the phone or email ready to answer any questions I have.
Janine Rose
November 2020
Highly recommend The Landlords Pension for setting up a SSAS pension. Many Thanks to Liam, Michelle, Teresa and the team for their support throughout and making it an easy process. Looking forward to our working relationship with future investments.
Matthew Martin
August 2020
Wouldn’t hesitate to recommend there services to open a SASS, massive thanks to Dan, Michelle and Teresa who made the setup seamless, very supportive throughout the whole process.
Look forward to many years of successful investments with The Landlords Pension
Angela Woods
July 2020
Highly recommend The Landlord’s Pension for opening a SSAS. They are highly professional yet friendly and personable. They are really helpful and keep you informed every step of the way. It’s refreshing to pay for a service by a company who actually do what they say they are going to, with zero aggravation and problems! Thank you guys 🙂
Vicki Prosser
February 2020
I recently opened my SSAS through The Landlord’s Pension and they have been professional, approachable and efficient throughout. Simon, Teresa and Michelle have all been great in answering my questions and queries and doing their best to ensure the process of transferring over my existing pension has been a smooth and seamless one. I would have no hesitation in recommending them.
Steve Brazil
January 2019
I’ve been working with The Landlord’s Pension this year to sort out historically messy pension arrangements and take control by creating a Family SSAS. Chris Brown has been an absolute pleasure to deal with, friendly professional advice all the way through. Thanks!
Ray Georgeson
03/12/2020
We had a number of workplace and final salary pensions, dotted all over the place and decided to pull them all into one SSAS. Laura and the team were excellent in explaining what to expect and keeping us advised every step of the way, in fact as part of the fact-find, we came across pensions we didn’t realise we had! I manage my own SSAS, but I know that Laura is at the end of the phone if I need her and she will not hesitate to help. I couldn’t recommend The Landlord’s Pension enough, they were absolutely brilliant!
