A commonly suggested method of security is a fixed and floating debenture over the company’s assets, which might meet the criteria of a loan at the point of the advance, but should the company being placed into administration, it would fail to meet the criteria of a first charge since certain creditors of the company take precedence over a debenture charge.
Commercial property
Another of the principal uses of SSASs is the purchase of commercial property, and although pure investment property is popular, the majority of SSASs own the property from which the business trades.
A key advantage here is that a SSAS with multiple members acquires the property within a single trust, simplifying the legal ownership; this compares favourably to acquisition through multiple Sipps, which can be more costly.
Again, the paying tax-deductible rent directly into the SSAS as opposed to a third-party landlord is attractive as is a 'friendly landlord'.
Company directors, who are often also trustees and scheme members do however need to retain their appropriate responsibilities in ensuring that the acquisition or disposal of a property to or from the company must be conducted on evidenced commercial terms.
Any subsequent leaseback of a property should also be documented by a lease or tenancy agreement, also on appropriate arm’s length terms.
SSASs can borrow from connected or third-party lenders to assist in the acquisition of a property. The maximum scheme borrowing is limited to 50 per cent of the net value of the scheme immediately before the borrowing and if from a connected source the same commercial terms must be applicable.
SSASs can also hold part of a property in conjunction with other parties, they allow joint ownership, and they can also phase purchase or dispose of a property where it may be efficient to do so.
There are extremely limited circumstances where residential property can be held in a SSAS, and these (other than the grandfathering mentioned earlier) relate solely to where it is necessary for an unconnected employee to occupy residential premises connected to the commercial premises as a condition of their employment.
An example might be where a public house has a manager’s flat attached to it.
Endurance
A final feature of the SSAS is the seamless, cascading down of wealth throughout generations.
Again, the single trust concept helps in that on death of a member, their entitlement within the scheme can be left to chosen beneficiaries who themselves can become beneficiary members of the trust.
Assets, particularly those that might be illiquid such as property, can continue to be held indefinitely with the income generated by them paid out to beneficiaries as they require it.
