Reply to: DIY Pensions for a Limited Company?

[WTFH]

Out of interest, do you use the SASS 'loanback' facility to get the funds into your company that is then useable for residential property without the pinutive 55% HMRC tax?

Can I just check, you're wanting to take money out of your company tax free to put in a personal pension, then lend that money back to your company (claiming that the loan is an investment), to buy property in the company's name?
Based on your other posts about the amount of money you have in your company, then laundering money through a pension sounds like something that accountants and tax advisers would be better placed to talk to you about, rather than us.

[hgllgh]

I use my SSAS to lend money to other investors and also to supply funds for my own property purchases.
I could also invest in stocks/shares/forex etc like a SIPP.

Out of interest, do you use the SASS 'loanback' facility to get the funds into your company that is then useable for residential property without the pinutive 55% HMRC tax?

[Fuzzynavel]

Was it complicated (or a lot of effort involved) to set up the SASS pension? Property Rental Income is then subject to normal CT?

Sorry for the delayed reply as I am not on here much.

Setting up the SSAS was relatively easy going through the process with HMRC took about 6-8 weeks to get the PSTR number and be declared a "proper" pension scheme.

Getting the money into the SSAS was the problem.

I had an AJBell SIPP...there were a few hurdles but once I satisfied them it was done within days.

The problem came when I tried to get my Defined Benefit pension transferred in. There are guidelines saying that you MUST get the advice of an IFA to transfer a DB pension. I took a while to find an IFA that was suitably qualified and willing to create the report.
I knew what the report would say and so did the IFA...we had a good laugh about it before we started but he said he was still going to charge £8k for the advice...this was paid out of the pension pot on transfer. He advised against the transfer btw.
I also had to have a call with some random dude who had received a days training on pensions at the pensions helper service to make sure that I wasn't being scammed or under duress....He didn't understand that I had set up the pension and I was in 100% control of the pension...It took 2 x 1hr calls before he was able to issue me the reference number that I needed to prove that I had talked with them
Being a company controlled SSAS I decided to transfer anyway....The actual transfer was delayed by the company holding the DB pension but we got there about 6-8 weeks later.

In all it took me about 8 months to set up the SSAS and get the money transferred in for use in my property co.

[hgllgh]

I've got a SSAS pension but the rules surrounding them may be changing so that the Tories can make sure that their donors have a monopoly on the pension market.

I use my SSAS to lend money to other investors and also to supply funds for my own property purchases.
I could also invest in stocks/shares/forex etc like a SIPP.

Was it complicated (or a lot of effort involved) to set up the SASS pension? Property Rental Income is then subject to normal CT?

[contractorZ]

There are quite a few cashback offers for transfers from platforms offering SIPPs at the moment. For example up to £3,500 from Hargreaves Lansdown.

Just wondering if anyone has any recent experience of any of these cashback offers that they could share?

Was is smooth etc.

[Fuzzynavel]

I've got a SSAS pension but the rules surrounding them may be changing so that the Tories can make sure that their donors have a monopoly on the pension market.

I use my SSAS to lend money to other investors and also to supply funds for my own property purchases.
I could also invest in stocks/shares/forex etc like a SIPP.

[Fred Bloggs]

I think it's £60k now?

And can I ask - turnover? I thought the rules were the lesser amount of £60,000 or operating profit?

Indeed. If the company pays the entire company turnover into a director's pension, there is no profit.

[7specialgems]

Yes. I have done exactly that, 100% turnover into a pension.

(Caveat, £40k annual contribution allowance applies. Carry forward of three years is possible if you were a member of a pension for up to three previous years).

I think it's £60k now?

And can I ask - turnover? I thought the rules were the lesser amount of £60,000 or operating profit?

[klimt]

Thanks so much Fred Bloggs and Contreras. Agreed this wouldn't usually be a desirable scenario but it is in the context that my personal tax is already into the higher rate for the year due to some inside IR35 work, so I'd rather not take any dividends beyond the 2K allowance. Also very interesting point about weighing the situation against the expected tax on the eventual pension - I'll have to do my sums before making a decision, but good to know it is permissible in principle.

[Contreras]

In this situation, are the any rules about pension contributions being proportionate to salary? For example, would it be permissible to take no salary or dividend at all, and transfer all revenue into a pension with no CT to pay?

It depends. Assuming you're the sole director / employee / fee-earner, and you mean profit from the current year, then yes it's allowed.

However lack of salary will cost a year's contribution to the state pension, for no saving in CT, so that part makes no sense.

For dividends, CT is currently 19% and the tax on the eventual pension income will likely be more than that (at a guess). So all hope is on the pension tax-free lump sum, or income tax dropping significantly, and who knows what the rules will be in years to come.

It depends on individual circumstances, but:

- Consider a tax efficient salary (£11,908)
- Consider using your dividend allowance (£2k) (*)
- Consider suffering basic rate dividend tax (8.75%) up to your personal allowance (*)
- Consider retaining enough profit in the company to pay for next year's salary in case of a lean year.
- and then dump the remainder into a pension.

* especially so if you have unused ISA allowance.

[Fred Bloggs]

In this situation, are the any rules about pension contributions being proportionate to salary? For example, would it be permissible to take no salary or dividend at all, and transfer all revenue into a pension with no CT to pay?

Yes. I have done exactly that, 100% turnover into a pension.

(Caveat, £40k annual contribution allowance applies. Carry forward of three years is possible if you were a member of a pension for up to three previous years).

[klimt]

In this scenario, if you paid £50k into your pension (given you haven't contributed in previous years), your profit would then be £0 so no CT to pay ?

In this situation, are the any rules about pension contributions being proportionate to salary? For example, would it be permissible to take no salary or dividend at all, and transfer all revenue into a pension with no CT to pay?

[Bod]

Yes they still take fees - "no work for free" remember - in my case a shade under 1% pa from the fund, which is growing at a steady 6% a year….

I don’t know if any funds, or indeed wealth managers, offer this type of fee structure. If they said “our only fees are 25% of any growth”, would you switch?

[Fred Bloggs]

For me it's all with Interactive Investor, and all then in one Vanguard diversified fund. I just wondered in the situation that either II or Vanguard went bust, would that mean only £85k of my SIPP would be protected? People regularly comment about not having business/personal savings >£85k with one bank, but don't see the same conversation around SIPPs/similar.

Your holdings with Interactive Investor in a Vanguard fund are held in trust for your SIPP. I actually can't remember the name of the trustee company that holds the assets in the II SIPP, it changed a couple if years back. I am sure the information is there if you want to know. So, if II go bankrupt then all things bring equal as long as there's nothing untoward going on behind the scenes, your investment is still going to be there irrespective of what happens to II. Presumably, the administrator would appoint another retail investment platform to be the shop window in to your SIPP investments.

[malvolio]

The IPSE scheme is the cheapest. Those who think different need to look a little harder; we've had this argument before. It may not be the best for you of course.

Just as an aside, don't use an IFA, use a Wealth Management company. Yes they still take fees - "no work for free" remember - in my case a shade under 1% pa from the fund, which is growing at a steady 6% a year, including across the recent crash on the market, and despite me having a monthly income from it.

As always YMMV, as will everyone else's...