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Business Finance from your Pension

Pensions can be used for people to
'self-invest' in their business

Call us now for a free consultation and assessment to see what your borrowing options are.

Here are the key points

Legislation introduced on 6 April 2006 significantly enhanced the flexibility of pension plans and how individuals could use those plans to invest in a range of assets.

Pensions can be used in a multitude of ways for individuals to “self invest” and to help with their businesses requirements. This is an area of growing interest which can provide business funding options against the background of tighter bank lending.

Specialist advice in this area of funding is essential as although the prospects are attractive there are also pitfalls to be guarded against.

For more information on how pension finance may suit your business email us here and we will have one of our specialist advisors call you back immediately.

The pension plans you can use

There are two main pension plans that offer the flexibility of self investing and borrowing options as described below:

Self Invested Personal Pensions (SIPPs)
Small Self Administered Schemes (SSASs)

Both have significant capacity for individuals to direct the investment within their own plan.

They differ in that SIPPs are personal schemes whereas SSAS’s are occupational schemes set up by a sponsoring employer.

Both allow investment into unlisted shares, corporate property and both have borrowing facilities to top up the amount you can invest.

However SSAS’s have the advantage in that they can lend money to the sponsoring employer on a commercial basis. The maximum loan that can be made is 50% of the fund.

If you currently have a pension which is not a SIPP or SSAS then you can consider transferring your existing pension in order to set up a SIPP or SSAS scheme.

SSAS as a business tool

An SSAS can be used to lend money to your company or a third party (this is known as a loanback).

The features / requirements of this type of arrangement are as follows:

Loans must be set up via a loan agreement.

The rate of interest must be 1% above the prevailing average bank rate, as prescribed by HMRC.

Maximum loan is 50% of the scheme value.

Loans need to be repaid on a capital and interest basis, and need to be secured as a first charge on a non-moveable asset.

The interest on the loan is paid into the SSAS fund and thus benefits the value of the pension fund.

There are also tax benefits for this type of set up.

Wondering what to do next?

Simply make contact here.

To request a call back or if you would like more information or have a specific requirement, email us here and we will channel your enquiry to the most appropriate advisor.

The great thing is there’s absolutely no cost for initial consultations and assessments. We look forward to hearing from you.