SSAS setup - can payments be back dated?

[CoblersClob]

Hi,

Is anyone aware if it is possible to back date payments in to a small self administered pension scheme? I am in the process of getting one set up and it is looking like it will not be established before my ltd co's financial year end. Ideally I would like to make the contribution to the scheme prior to this date so that it can count against profit for the current year. I am aware as a general rule HRMC like to go on payment transfer date as the 'tax point' for the transaction when making pension contributions. Thus if my scheme and bank account are not established in this fin/yr I will have to make the deductions against next year.

Does anyone have experience of this or similar situations? I'm thinking I'm stuck but if there's a tax allowable provision or otherwise entry I can make this would be a great help.


Thanks in advance.

[IR35 Avoider]

I recently wanted to create an expense in the accounts within a company year that would correspond to salary payments that would only be made after, I was told this was OK as the salary to be paid was funded out of income generated within the year. (It may have been relevant that I treat myself as IR35-caught, not sure.) If a salary bonus can be declared as an expense in the year before it is actually paid, I don't see why the same shouldn't apply to a bonus in the form of a pension payment. (There were some caveats with my salary, something like it has to be actually paid before the accounts/CT for the earlier year are submitted.)

I'm not sure why you are opening a SSAS, unless you have very obscure requirements such as wanting to put pension money into a commercial premises, I would have thought that type of pension was obsolete. However as that's not what you were asking about, ignore this comment.

What you could maybe do is put money into a SIPP (which can presumably be opened much quicker) and transfer it to the SSAS later.

[CoblersClob]

Thanks for the response

I'm not sure why you are opening a SSAS, unless you have very obscure requirements such as wanting to put pension money into a commercial premises, I would have thought that type of pension was obsolete. However as that's not what you were asking about, ignore this comment.

As far as I'm aware the controls on investments for SIPPs and SSASs are exactly the same - i.e. commercial property is A-OK for both. I want the SSAS because I want the control and although conventional wisdom is that the SSAS is more expensive to run, on the calculations I have made (i.e. running and reporting on it myself) it should be cheaper and less hassle. I think I like the idea of having 100% control and not having to instruct (and pay) someone else every time you want to fart.

I think what you've said about provisions is probably correct and does make sense but I'm going to have a chat to an accountant to understand if this is possible and then how to classify it if I do within the accounts. Certainly agree that the cash needs to move before the accounts are submitted; this shouldn't be a problem.

[quackhandle]

Not sure, I guess it depends on how many core licenses you want?



qh

[IR35 Avoider]

Thanks for the response



As far as I'm aware the controls on investments for SIPPs and SSASs are exactly the same - i.e. commercial property is A-OK for both. I want the SSAS because I want the control and although conventional wisdom is that the SSAS is more expensive to run, on the calculations I have made (i.e. running and reporting on it myself) it should be cheaper and less hassle. I think I like the idea of having 100% control and not having to instruct (and pay) someone else every time you want to fart.

I think what you've said about provisions is probably correct and does make sense but I'm going to have a chat to an accountant to understand if this is possible and then how to classify it if I do within the accounts. Certainly agree that the cash needs to move before the accounts are submitted; this shouldn't be a problem.

I don't understand how a SSAS can be "cheaper and less hassle" than a SIPP, given that I would say both are essentially zero for a SIPP?

I have a SIPP with Sippdeal, the costs and admin are not really any different to having an ISA or dealing account with any stock-broker. The only extra thing I suppose is that I have to sign a computer-generated form and write a cheque each time I make a single contribution.

My SIPP cost nothing to to set up and run. Depending on what I invest in, there could be a £50 a year charge for the account, however that's the same charge that brokers would make to run an ISA or dealing account, so I see that as a brokerage cost rather than a SIPP charge.

Edit: on re-reading, I see your comment about having to "pay someone else everytime you fart." I've no idea why you would think that would be necessary, other than some person you're paying has given you the impression that it is. I suspect you would be better off without them in your life, whoever they are. (If your accountant has a sideline as a financial advisor, suggest you only use them as the company accountant. If you have a separate financial advisor, my only comment is that the net effect of paying a middleman who need not exist is that your expected returns decrease.)

[IR35 Avoider]

I should add that the reason I have some knowledge about SSAS is that a very long time ago I looked into them because the contribution limits were potentially higher than for personal pensions, that changed when Gordon Brown allowed essentially unlimited personal pension contributions, in 2006 I think, and at that point I thought SSAS became essentially an obsolete product. I don't know if the re-introduction of annual limits has made a difference. You didn't give contribution limits as a reason, so I suppose that's not it.

However, despite the ancientness of my knowledge, I remain fairly confident that a SSAS must be tens if not hundreds of times as much hassle to set up and run as a SIPP, that's why I find your comments so mystifying that I keep blathering on about this, even though I know it's not what you wanted to discuss.

[IR35 Avoider]

A quick look at the Wikipedia entry for SSAS and the only advantage I can see over SIPPS is that they can loan money to the company. For a contractor company I don't see why this would be wanted.

This article also seems to see the ability of a SSAS to lend, or greater flexibility in buying commercial property, as the advantage over a SIPP.

Sipp vs Ssas: what

[CoblersClob]

Thanks for the further info guys.

To answer my original question deduction from corporation tax is dated based upon when payment is made:

Tax relief can only be given on contributions that have actually been paid. The amount shown in the profit and loss account in respect of obligations in respect of defined benefit schemes may be substantially different from the amount of contributions paid to the scheme. But it is only the amount actually paid that can be considered for tax relief.

RPSM05102010 - Technical Pages: Contributions and tax relief: Employer contributions: Entitlement to tax relief