A SSAP is established under trust by a company’s directors. The director is the ‘member’ and ‘Trustee’ of the pension scheme. A SSAP provides a tax-efficient environment in which a company’s funds can be invested to provide retirement benefits for directors. As the fund grows it is ring- fenced for the member and is free from creditors should the company go into liquidation.
A SSAP gives company directors the opportunity to maximise their pension funds prior to retirement by giving them control over their investments. Unlike other pension schemes the directors can control and choose their investments. The range of investment options are extensive and include property, structured deposits, direct investment in stocks and shares etc.
Since the introduction of the Finance Act 2004, the Trustees of single member SSAPs can also borrow money in order to invest for the benefit of the scheme. There are certain rules with regard to borrowing that have to be adhered to.
SSAP have got to be set up and administered through a company that is revenue approved specifically for this purpose.
What are the tax benefits of SSAP?
- Contributions made by the company qualify for Corporation Tax relief
- Members’ personal contributions qualify for Income Tax relief
- Investments grow free from Capital Gains Tax and Income Tax
- Deposits grow free from DIRT Tax
- A tax free cash lump sum can be taken at retirement
- Any balance can be transferred into an Approved Retirement Fund
- A tax free sum can be payable on death before retirement