SIPPS v SSAS: Which is Best For Commercial Property?

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SIPPS v SSAS: Which is Best For Commercial Property? Powered By Docstoc
					SIPP or SSAS,
which is best
for commercial
property?
Scots Financial Advisor
William George IFA
explains these important
investment vehicles...


Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
"Great question,
both are good
but they have
different uses."
Now let's take a look at why both
are helpful for retirement planning
when combined with commercial
property investment...




Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: What is a SIPP?

A: It's a Self Invested Personal Pension Plan
that is suited to those who like more hands
on control of their pension investments.

It is for INDIVIDUALS.



Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: What is an SSAS?

A: A Small Self Administered Scheme, also known
as a SSAS, is most often used by a group of people.

Companies usually set up this type of scheme for
high level personnel and directors. Because it is for
employees, it’s considered to be an occupational
pension that can have up to eleven people
in the group.


Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: As an individual why use a SIPP?

A: Because they are often used as a retirement
vehicle due to their flexibility and ability to
invest in the lucrative commercial property
market.

It is a TAX efficient way to use pension funds.


Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: I have a small business will a SIPP suit me?
By far the most common use of a SIPP has been through small
businesses using their pension funds to buy their own business
premises, so yes, using a SIPP could suit a small business
owner well.

Changes to the pension rules in 2006, means that it is now
possible to do this, even if the property is already owned
by them or someone connected to them.

However it should be noted that these types of arrangements
are subject to strict criteria must be done on a commercial basis.
Rent paid to a SIPP must be a market rent.

Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: What advantages will this give me?
Buying your pension within a SIPP has several tax advantages.

The rent you pay to the pension fund can be paid free of tax
because it is a deductible business expense. If you sell your
property when it is contained within the pension fund then
there is no capital gains tax payable.

Also, if you die before age 75 and have not started taking
your pension yet then your property can be paid into your
estate free of inheritance tax.



Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: As a group why use an SSAS?

A: Because there are a number of benefits that come
to members of a SSAS occupational pension scheme.
These benefits can be realised on the death of the member
or upon their retirement.

However, at no time, during the membership in the
scheme, can any part of the SSAS provide benefits,
whether directly or indirectly, to a member or that member’s
family.

Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: What are benefits of being in an SSAS?

A: Key benefits are substantial; when the company buys a
property, it provides the company with corporate tax relief,
as funds entered into the SSAS are not fully taxable.

Furthermore, should the property be sold or rented, the
company does not incur tax liabilities from the sale of the
property, or from the income derived from rental of the
property, thereby effectively lowering the company’s tax
exposure.

Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
There are more SSAS benefits too...

Trustees can make loans, from the scheme, to the company or companies
associated with the original company, as pertaining to the company’s business.

Borrowing is allowed to purchase assets but restricted to...

●   Commercial properties.
●   No more than 45% of the market value, plus 3x annual contributions from
    employer, plus 3x member contributions per annum. The SSAS must
    exclude the value of assets set aside for the death of member
    or retirement of member.
●   The IR SPSS must be notified, if loan is over 6 months, and when funds
    borrowed less than 10% of current market value of fund, or £50,000.

Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: What about shares in an SSAS?

A: Trustees of the SSAS may not purchase more than 30%
of shares in an unlisted company. Trustees are not allowed
to buy shares from other members or people associated
with a member.

Members are not allowed to buy from a company that is
sponsoring the Small Self Administered Scheme. A 30%
limit is applied to voting rights and dividends of the SSAS.


Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: What are "Acceptable" investments?

The PSO state these investments are acceptable...

●   Shares in the company
●   Company deposit accounts
●   Commodity Futures
●   Financial Futures
●   Trading Options
●   Copyrights


Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: What are "Non-Acceptable" investments?

Certain activities and assets are considered to be non-
acceptable. Trustees cannot loan to...

●   Other members or those connected to a member of the SSAS.
●   A sponsoring company or a company deemed to be associated,
    unless the rate meets the current non-commercial rate.
●   A sponsoring company or a company deemed to be associated,
    unless it is for commercial purposes that have been approved.
●   Insolvent companies.
●   If monies are being use to rescue a company facing insolvency.

Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
SIPP or SSAS For Commercial Property
Q: Anything else to note?

A: Yes, re LOANS with an SSAS. The loan cannot exceed 25% during
the first two years of its existence. Plus, it cannot include funds from
another scheme until after the two year period has
been met. After the two year waiting period, the scheme
can then loan up to 50% from the pension fund.

All loans must be for the company’s business and interest rates
on the loan must be 3% over the base rate that banks use on
the day of the loan. Other conditions may apply and your
financial advisor is the best person to explain
the process in full detail.

Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk
"So, using a
SIPP or SSAS
to invest in
Commercial
Property can
bring solid
benefits."
If you need more advice
please do phone me below...

Call FREE on 0800 321 3508


Copyright: All Rights Reserved 2013 William George IFA www.williamgeorgeifa.co.uk

				
DOCUMENT INFO
Description: In recent times using a pension vehicle such as SIPP (Self Invested Pension Plan) or SSAS (Small Self Administered Scheme) has proven to be a very popular way to invest in commercial property. William George explains the difference between them for individuals and small companines.
About William George has been an Independent Financial Advisor (IFA) since 1993. From Dunfermline, Fife in Scotland, he services clients across UK, as well as expats from as far afield as New Zealand. He also has appeared on BBC Radio Scotland discussing investing and specialises in helping people with Retirement Planning and Pension Advice.