SSAS Loanbacks

by | Jun 26, 2020



Elite Wealth Services have been providing technical support to IFA’s and Accountants for over 30 years – but now for the 1st time, they can offer a complete SSAS & QNUPS service through SEGMENTED SOLUTIONS LIMITED (owned and run by our MD – Paul Stewart).

If you want to know how a SSAS and a QNUPS can create your own tax haven here in the UK – then just ask – everything as always starts with a FREE telephone consultation.

Are you are looking to establish your own SSAS, or have clients wanting to establish a SSAS? Then visit:

We are often asked to explain how a company can access money from a SSAS – using the SSAS LOAN BACK Arrangements…. So we thought we’d give you some notes to ponder as you consider your individual scenario:

Taking a loan from an Approved Registered Pension if you are ‘connected’ to the scheme is normally subject to a unauthorised payment charge of 55% – HMRC define ‘connected’ specifically… but if you are the owner of the pension (SIPP) or are the Director of the Sponsoring Employer… then you will be defined as ‘connected’! If in doubt, please ask us and we’ll be happy to help!

However, there is a specific exemption to this – which is where a loan is granted by an Occupational Scheme to the Sponsoring Employer. As a SSAS is an Occupational Scheme, it means that a SSAS can indeed grant loans.

However juts because a loan is ‘allowed’ – doe not mean that you are free to help yourself to the money and not suffer from the 55% unauthorised payment tax charges. There are some key rules that MUST be met. These fall under 5 headings:

1) Security
2) Interest Rate
3) Loan Term
4) Loan Amount

The loan must be secured throughout its term by a first charge over an asset with a value at least equal to the value of the loan plus interest. The asset does not need to be owned by the sponsoring employer, however there can be no other charge – including a floating charge – that takes precedence over the charge of the pension scheme.

If the asset is replaced during the term of the loan, the asset used as security instead must have a value at least equal to the lower of:

The market value of the asset being replaced; or
The value of the remaining loan plus interest.
In practical terms, the value of the asset must be determined by an independent market valuation from an accountant, chartered surveyor, or other qualified person.

In December 2009 (and in further announcements throughout 2010) HMRC clarified its position with regard to the use of taxable property, such as residential property or chattels, as security for registered pension scheme loans. If an investment regulated pension scheme acquires a direct or indirect interest in taxable property, then the amount paid is normally treated as an unauthorised payment.

Where an authorised employer loan is secured against taxable property, an unauthorised payment will be regarded by HMRC as having been made in the following circumstances:

Where arranging security for the loan incurs legal or administrative costs, and those costs are paid from the pension scheme’s assets (rather than, for example, paid by the sponsoring employer), the amount paid will be treated as an unauthorised payment.

If the loan recipient defaults, and the pension scheme enforces its charge over the taxable property, HMRC will treat that acquisition of a further interest in the property as an unauthorised payment equal to the value of the scheme’s interest i.e. the outstanding loan balance.

Interest Rate
The minimum interest rate that can be applied to an authorised employer loan is prescribed by HMRC, and must be no less than 1% above the average clearing bank base rate for six nominated High Street banks rounded up to the nearest 0.25%. This rate will be calculated at the reference date in accordance with HMRC’s Prescribed Interest Rates for Authorised Employer Loans Regulations 2005.

Term of Loan
An authorised employer loan must be for a fixed term not exceeding five years, although it can be rolled over once for an additional term not exceeding five years.

Amount of Loan
The loan amount must be no more than 50% of the aggregate value of the scheme assets at the point at which the loan is made, taking into consideration any existing loans/borrowing. The scheme’s value is calculated as the total of any cash held, plus the market value of other assets immediately before the loan is made.

Repayment Terms
Loan repayments must be made in equal instalments of capital and interest for each complete year of the loan. If a loan payment is missed, or if the amount due to be repaid in any borrowing year is less than required under this rule, then an unauthorised payment is deemed to have been made.

The Borrower must use the borrowed money for a business purpose to benefit the Borrower’s trade or profession. The Borrower may be asked by HMRC to produce receipts or other evidence to demonstrate how the funds have been used.

Unauthorised Payments
The breach of many of HMRC’s requirements, including the rules on loan security and the rate of interest charged, can lead to the loan (or part of it) being deemed an unauthorised payment. This can lead to the sponsoring employer and the scheme administrator becoming liable for a number of tax charges totalling 55%.

If you want to discuss SSAS Planning – head over to and complete the SSAS Enquiry form and we” get in touch and set up a FREE telephone consultation.

Paul Stewart (Our MD) is a Pensions Administrator (an official HMRC recognised role). Segmented Solutions Ltd is also an HMRC approved SSAS Practitioner – able to help you in dealing with administration of a SSAS.

Paul was also an Examiner for the Chartered Insurance Institute dealing with the exams IFA’s had to pass in order to give advice on …PENSIONS! So if there is anyone who can help guide you, then he can!

Most Advisors, such as IFA’s and Accountants do not have the internal experts to assess a client’s FULL situation – and come up with the best overall strategy.

As I have worked in the pensions and tax planning field for over 30 years, I have personal access to experts in all taxes and can combine these experts into a unique service that really does go beyond what you’d get from your normal ‘Advisors’.

Every wealthy entrepreneur or property investor I have ever met had their own Accountant, Solicitor and Financial Advisor – yet in 90% of cases we were able to dramatically able to improve their overall exposure to UK taxes and access to their pension money.

What is vital is the proper implementation – with care at every stage.

This is why we offer a FREE consultation – as it lets us explore your current situation before jumping in with ‘solutions’.

If you are interested in seeing if your pension can be used to help support your business – then call us now, or send us your details and we will call you back. 

We look forward to helping you soon.