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Running a family-owned business comes with unique challenges and rewards. You’re not only managing the day-to-day operations but also thinking about how to pass down your business and wealth to future generations. Ensuring that your family business thrives and that your legacy is secure requires careful planning—especially when it comes to your financial future.
That’s where SSAS pensions come in. Small Self-Administered Scheme (SSAS) is a powerful tool that can help family-owned businesses secure their financial future, grow their wealth, and plan for succession. In this blog, we’ll explore the many benefits of SSAS for family businesses, and how it can be the ideal solution for managing wealth across generations.
A SSAS pension is a pension scheme that allows business owners full control over how their pension funds are invested. Unlike traditional pensions, which offer limited investment options, SSAS provides the flexibility to invest in your own business, purchase commercial property, and even lend money back to the business.
For family-owned businesses, SSAS offers a wealth of benefits:
Let’s dive deeper into how SSAS can help your family business grow, protect wealth, and plan for the future.
One of the key concerns for any family-owned business is how to transition ownership and management to the next generation. SSAS can play a crucial role in ensuring that this transition is smooth and tax-efficient.
By adding family members to the SSAS as members, you can ensure they benefit from the same tax-free growth and flexible investment options that you do. This can be especially useful when it comes to passing down shares in the business or ensuring that key assets, like commercial property, are transferred smoothly.
The ability to hold shares in the business within the SSAS means that when the time comes for you to retire or step down, your children or other family members can take over the business, without incurring inheritance tax. SSAS makes it easier to transfer both ownership and control of the business to the next generation in a tax-efficient way.
One of the unique features of SSAS is that it allows you to invest in a wide range of assets that can help build family wealth. For family businesses, this might include investing in:
The tax-free growth of investments within SSAS means that your family’s wealth can grow at an accelerated rate, without being eaten away by taxes. Whether you’re looking to expand your business or build a diverse investment portfolio for your family’s future, SSAS gives you the flexibility to do so in a tax-efficient way.
Family-owned businesses often face challenges when it comes to financing growth, especially in the early stages. However, with SSAS, you have access to capital through the loan-back facility. This allows you to borrow up to 50% of your SSAS fund’s value to reinvest in your business.
The loan-back facility is particularly valuable for business owners who want to grow their business without relying on external lenders or investors. What’s more, the loan is repaid back into your SSAS, with interest, which helps grow your pension pot at the same time. This provides both business funding and pension growth, making it a win-win for family businesses.
Contributions made by your business to the SSAS are tax-deductible, which helps to reduce your corporation tax liability. Additionally, any income or capital gains generated from the investments in your SSAS are tax-free. This means that more of your money stays within the SSAS, helping to grow your pension and wealth more quickly than traditional pension schemes.
For family businesses, this is a huge benefit, as it helps you reinvest in the business while simultaneously building a secure financial future for yourself and your family.
One of the most powerful aspects of SSAS for family businesses is the ability to add family members as SSAS members. This is particularly useful if you plan to pass the business on to your children or other relatives.
By including your family members in the SSAS, they can inherit the assets within the SSAS without triggering inheritance tax. This makes the process of passing on your business smoother, as there are fewer tax barriers and fewer complications.
When you set up your SSAS, you can transfer business shares into the pension. When it comes time for you to retire or step down from the business, you can pass on these shares to your family members, who are already members of the SSAS. This ensures that the business stays in the family, while avoiding inheritance tax.
By holding business assets (such as property or shares) in your SSAS, you ensure that the ownership transfer is not complicated by personal estate taxes. Your family members can continue to benefit from the SSAS, without worrying about the hefty costs of inheritance tax or losing control of the business.
Setting up SSAS for your family business is relatively straightforward, but it’s essential to work with pension professionals to ensure everything is set up correctly. Here’s how you can get started:
Meet Tom and Lisa, who run a family-owned construction company. Tom wanted to ensure that his children would be able to take over the business when the time came. He set up a SSAS and added both his children as members of the pension scheme.
Tom’s SSAS held shares in the business and purchased the commercial property where the business operates. The rental income from the property was paid back into the SSAS, growing his pension fund. When Tom was ready to step down, he passed the shares in the business to his children, tax-efficiently, using the SSAS. His children are now running the business, and Tom enjoys peace of mind knowing that his family’s financial future is secure.
SSAS is an incredibly powerful tool for family-owned businesses looking to grow their wealth, plan for the future, and ensure smooth business succession. With the ability to diversify investments, pass on assets tax-efficiently, and protect family wealth from inheritance tax, SSAS provides all the tools you need to secure your business’s legacy.
If you’re ready to explore how SSAS can help protect your family business and ensure a smooth transition, book a consultation with Retirement Capital today.We’ll help you set up and optimise your SSAS for long-term success and financial security.
