SSAS Pension Scheme

At Towerstone, we specialise in higher rate pension tax relief advice and have written this article for business owners and directors exploring pension options. The purpose of this article is to explain how SSAS pensions work and when they are commonly used, helping you make informed decisions.

A SSAS pension scheme is one of those things that people often hear about through business networks or advisers but rarely fully understand. In my experience, it is usually mentioned in the context of buying commercial property through a pension or lending money back to your own company. That tends to spark interest very quickly.

In my opinion, a SSAS pension scheme can be an extremely powerful planning tool for the right person in the right circumstances. It can also be completely unsuitable if it is set up for the wrong reasons or without a clear long term plan. I have seen both outcomes in practice.

This article explains what a SSAS pension scheme is, how it works in the UK, who it is suitable for, what you can and cannot do with it, and the key risks and responsibilities involved. I am going to keep this practical and grounded in real world experience rather than theory or sales language.

What Is a SSAS Pension Scheme?

SSAS stands for Small Self Administered Scheme.

A SSAS is a type of occupational pension scheme set up by a limited company, usually for the benefit of directors and key employees. It is most commonly used by owner managed businesses.

Unlike a personal pension or SIPP, a SSAS is controlled by its members, who usually also act as trustees.

In simple terms:

• The company sets up a pension scheme

• The members are also the trustees

• The trustees control how the pension money is invested

From experience, that control is the main attraction. It is also the main responsibility.

How a SSAS Differs From Other Pensions

To understand whether a SSAS makes sense, it helps to compare it with more familiar options.

SSAS vs Personal Pension

A personal pension is owned by an individual and managed by a pension provider. Investment choices are limited to what the provider allows.

A SSAS is owned by the scheme and controlled by its trustees. Investment choices are far wider.

In my opinion, a SSAS is not about simplicity. It is about flexibility.

SSAS vs SIPP

A SIPP also offers investment flexibility, but it is still provider led.

A SSAS is trustee led. That distinction matters.

With a SSAS:

• Members are trustees

• Decisions are made collectively

• The scheme can interact directly with the sponsoring company

From experience, this interaction with the company is where much of the value comes from.

Who Can Set Up a SSAS?

A SSAS can only be set up by a limited company.

It is not available to sole traders or partnerships unless they operate through a company.

Typical users include:

• Owner managed companies

• Family run businesses

• Companies with two or more directors

• Groups of connected companies

In my experience, SSAS schemes work best where there is a stable group of people with aligned interests.

Who Regulates SSAS Pension Schemes?

SSAS pension schemes are registered with HM Revenue & Customs and must meet HMRC pension rules to receive tax advantages.

Guidance and registration requirements are published via GOV.UK.

There is no FCA regulation of the scheme itself in the same way as retail pensions. That places more responsibility on trustees.

In my opinion, this lack of hand holding is both the strength and the risk of a SSAS.

How a SSAS Is Structured

A typical SSAS has several key elements.

• A sponsoring employer which is the company

• Members who are usually directors or key employees

• Trustees who are usually the same individuals

• A professional scheme administrator

• A bank account in the name of the scheme

From experience, the administrator plays a critical role. A SSAS without good administration is a problem waiting to happen.

Contributions Into a SSAS

Contributions to a SSAS usually come from the sponsoring employer.

Employer contributions are:

• A deductible expense for corporation tax purposes

• Not subject to employer National Insurance

• Paid gross into the pension

Individual contributions are also possible but less common in practice.

In my opinion, employer contributions are one of the most tax efficient ways for a company owner to extract value from their business.

Investment Flexibility Within a SSAS

This is where a SSAS really stands apart.

A SSAS can invest in a wide range of assets including:

• Commercial property

• Shares and funds

• Cash and deposits

• Loans to the sponsoring employer

• Certain alternative investments

From experience, most SSAS schemes are set up for one of two reasons. Property or lending.

Buying Commercial Property Through a SSAS

One of the most common uses of a SSAS is to buy commercial property.

This could include:

• Offices

• Warehouses

• Workshops

• Retail units

• Business premises used by the company

The SSAS buys the property and leases it to the company.

In practice:

• Rent is paid from the company to the pension

• Rent is deductible for corporation tax

• Rent is received tax free within the pension

In my opinion, this is one of the most powerful long term planning strategies available to business owners.

Using a SSAS to Buy Your Own Business Premises

This is a very common scenario.

The SSAS purchases the building used by the business.

The business pays market rent to the SSAS.

Over time:

• The company builds no property value

• The pension builds a valuable asset

• Rent flows from the company into the pension

From experience, this can significantly strengthen retirement planning while keeping control within the business group.

VAT and Property in a SSAS

VAT can be an issue with SSAS property.

If the property is opted to tax:

• VAT may apply to the purchase

• VAT may be charged on rent

The SSAS may need to be VAT registered.

In my opinion, VAT planning should always be considered before buying property through a SSAS.

Borrowing to Buy Property

A SSAS can borrow money to help buy property.

The borrowing limit is usually:

• Up to 50 percent of the net value of the scheme

Borrowing is often used alongside:

• Cash in the SSAS

• New employer contributions

From experience, this allows property purchases earlier than might otherwise be possible.

Lending Money Back to the Company

Another major feature of a SSAS is the ability to lend money to the sponsoring employer.

This is known as a SSAS loan back.

There are strict rules.

The loan must:

• Be secured

• Be at a commercial rate of interest

• Be repaid within a set term

• Not exceed a percentage of scheme assets

When done properly:

• The company receives funding

• The pension receives interest

• Interest flows tax free within the scheme

In my opinion, this can be an excellent alternative to bank finance in the right circumstances.

Common Uses for SSAS Loan Backs

From experience, loan backs are often used for:

• Business expansion

• Purchasing assets

• Improving cash flow

• Buying out shareholders

They are not suitable for ongoing operating losses.

In my opinion, loan backs work best where there is a clear repayment plan.

What You Cannot Do With a SSAS

SSAS schemes are flexible but they are not a free for all.

There are strict prohibitions.

A SSAS cannot:

• Lend money to members personally

• Buy residential property

• Invest in tangible moveable property such as art or cars

• Provide personal use assets to members

Breaching these rules can result in severe tax penalties.

From experience, most SSAS disasters come from misunderstanding what is not allowed.

Trustees Responsibilities

Members of a SSAS are usually trustees.

That role carries legal duties.

Trustees must:

• Act in the best interests of the scheme

• Follow pension legislation

• Ensure investments are appropriate

• Keep proper records

In my opinion, being a trustee should not be taken lightly.

This is not a passive pension.

The Role of the Scheme Administrator

Every SSAS should have a professional administrator.

The administrator handles:

• HMRC reporting

• Scheme compliance

• Valuations

• Contribution tracking

• Payment processing

From experience, the quality of the administrator makes or breaks a SSAS.

Choosing the cheapest option is often a false economy.

Tax Benefits of a SSAS

The tax advantages are similar to other registered pensions but used differently.

Key benefits include:

• Corporation tax relief on employer contributions

• Tax free growth within the scheme

• No income tax on rental income

• No capital gains tax within the scheme

In my opinion, the ability to shelter commercial property growth from CGT is particularly attractive.

Taking Benefits From a SSAS

At retirement age, benefits are taken broadly in line with pension rules.

This may include:

• Tax free lump sums

• Pension income

• Flexi access drawdown

The presence of property means planning is required.

From experience, benefit planning should start well before retirement.

What Happens to a SSAS on Death

A SSAS is usually outside the member’s estate for inheritance tax purposes.

Benefits can be passed to beneficiaries depending on scheme rules and nominations.

From experience, SSAS death planning can be very effective but it must be coordinated with wider estate planning.

SSAS and Inheritance Tax Planning

While a SSAS is not an inheritance tax avoidance tool in itself, it can be part of a wider strategy.

Assets inside the pension:

• Are usually outside the estate

• Can pass tax efficiently

In my opinion, this is often overlooked when comparing pensions with property held personally.

Risks and Downsides of a SSAS

A SSAS is not suitable for everyone.

Key risks include:

• Complexity

• Ongoing administration costs

• Responsibility on trustees

• Concentration risk if heavily invested in one asset

From experience, a SSAS should only be used where there is a clear purpose.

Setting one up just because it sounds clever is a mistake.

Costs Involved

A SSAS has higher costs than a simple pension.

Costs may include:

• Setup fees

• Annual administration fees

• Property related costs

• Professional advice fees

In my opinion, costs are justified only where the benefits outweigh them.

Who a SSAS Is Usually Suitable For

From experience, a SSAS tends to work best for:

• Profitable limited companies

• Directors with long term plans

• Businesses owning or planning to own premises

• Groups wanting control over investments

It is usually not suitable for:

• Very small companies

• Short term planning

• People wanting hands off pensions

Common Misunderstandings I See

From experience, these misunderstandings come up frequently:

• A SSAS is tax free money you can use personally

• You can buy your house through a SSAS

• You can borrow unlimited amounts

• Administration is optional

In my opinion, each of these beliefs leads to problems.

Practical Advice From Experience

If you are considering a SSAS, I would suggest:

• Be clear on why you want one

• Model the numbers carefully

• Take regulated advice where required

• Choose an experienced administrator

• Plan for the long term

A SSAS is a strategic tool, not a quick win.

SSAS Versus Just Buying Property Personally

This comparison comes up often.

Buying property personally means:

• Rent is taxable

• Gains may be taxable

• Property sits in your estate

Buying through a SSAS means:

• Rent is tax free in the pension

• Gains are sheltered

• Property is in the pension environment

In my opinion, the difference over 20 or 30 years can be substantial.

Key Takeaways

A SSAS pension scheme is one of the most powerful but misunderstood tools available to UK business owners.

In my opinion, it sits at the intersection of pensions, property, and corporate planning. When used properly, it can transform how business owners fund retirement and manage long term wealth.

From experience, the people who benefit most from a SSAS are those who treat it as a long term structure with clear rules and professional support. The people who struggle are those who see it as a shortcut or a way to bend the rules.

If there is one takeaway, it is this.

A SSAS is not about doing more with your pension. It is about doing the right things with it, in the right order, with the right advice.

If you would like to explore related pension guidance, you may find how do i claim my workplace pension and how do pensions work useful. For broader pension guidance, visit our pensions knowledge hub.