Making Contributions

You and the other members start paying into the pension. As with all company pension schemes, HMRC limit the amount of tax relief given by limiting the contributions that can be made in respect of any member (known as the ‘annual allowance’). Currently this is £40,000 per person.

Where a Member has not utilised all of the annual allowance in previous years it is possible to use the ‘spare’ element. One may carry forward these spare elements for up to 3 years as long as the member had some form of pension in that time.

Sponsoring employers, Members and third parties can contribute to the SSAS. Third party contributions are treated as Member contributions. Contributions can be paid on a regular or one-off basis. Employer contributions are paid gross and although there is no specified limit on the amount an employer can pay in, it is taken into account for the purposes of a Member’s relevant annual allowance. A sponsoring employer will only get full tax relief for its contributions as a business expense if its local Inspector of Taxes accepts that the expense is incurred ’wholly and exclusively’ for the purposes of the employer’s trade or profession. A sponsoring employer can only pay contributions for Members who are its employees. Such Members can make arrangements with their employer for part of their employed earnings to be given up and paid to the SSAS as an employer contribution. This is known as ‘salary sacrifice’ and Members who wish to pursue this should speak to their employer and/or consult a financial adviser.

For Schemes that have two or more members in them the employer may make a contribution which is not immediately on behalf of any one member. These payments go into what is known as the ‘General Unallocated Fund’. These contributions sit in a ‘Waiting room’ for member contributions until the day that the trustees decide to allocate them to one or other of the members.

Whilst in this ‘Waiting room’ the trustees may invest the funds, include them in calculation for loanbacks, scheme borrowing and the employer may receive corporation tax relief on the contribution in the year of payment if the contribution is £500,000 or less.