Vero

Registered with Property118.com
Saturday 11th July 2015

Trading Status
Sole Owner

Insures properties through a broker recommended by Property118
No


Latest Comments

Total Number of Property118 Comments: 15

Vero

22:56 PM, 7th July 2020
About 4 months ago

One of the best kept secrets? - The SSAS “Loanback”

Reply to the comment left by Adrian at 07/07/2020 - 21:07
Adrian I expect in this instance it migth be allowable - HMRC allows an SSAS to lend working capital to businesses, which may include residential property development businesses. Loan should be repaid when the development is complete/units sold but definitely prior to any letting. This usually refers to a formal property development company but can include "professional flippers"; but excludes traditional buy and hold landlords. I am guessing, in this case, that the refurbishment is carried out within an SPV, or other vehicle, as a development, and refinance complete prior to selling/flipping? If borrowing working capital to develop/refurbish resi property to increase value, but then holding that resi property and letting it post-refinance, I'd probably want to double-check with HMRC first that it still meets the "working-capital loan to a development business" scenario. It sounds a potential gray area to me, so I'd like written approval, just to cover myself.... Read More

Vero

9:50 AM, 29th August 2019
About A year ago

One of the best kept secrets? - The SSAS “Loanback”

Reply to the comment left by Mark Alexander at 29/08/2019 - 08:50
Hello Mark.

Yes, shares in Exempt Property Unit Trusts (and REITS), can be held by SSASs and SIPPs.

As expected though, HMRC set out strict rules for EPUTS when they hold resi property, as they see this as indirect holding of taxable property.

If the EPUT invests in residential property it needs to be established and operated as a "Genuinely Diverse Commercial Vehicle", as defined by HMRC pension tax rules.

Dentons have summarised GDCV here:
https://www.dentonspensions.co.uk/Investments/Genuinely-diverse-commercial-vehicles/

If an EPUT holds any residential property, no SIPP or SSAS, either alone or together with one or more associated persons, may hold or have entitlement to more than 9.9 per cent of the units in the EPUT. This means an EPUT needs to be invested in by at least 11 investors who are unconnected, with any connected/associated investors limited to 9.9 per cent collectively.

I think it's easy to be scared off because the general subject is not well known, but it's not overly complicated and in these days of the internet, the information is now freely available to all, so can be demystified.

(General caveat - there is always the chance of legislation changing and/or a change of government, particularly with the current opposition and also the new territory the UK is currently in. The old rule of thumb of not letting the HMRC tail wag the dog too much applies).

The beauty of an SSAS is that you don't have to have a restrictive "pension operator" run or oversee the scheme, you can more or less run it yourself, with a practitioner there when you need them to run things past, etc (again, ssaspractitioner.com is great at this, also very reasonably priced). As long as you are both happy that you meet all HMRC rules at all times, you can pretty much do your own thing.

I hope that helps.... Read More

Vero

17:29 PM, 28th August 2019
About A year ago

One of the best kept secrets? - The SSAS “Loanback”

I have to agree with Craig - there are so many benefits for companies in establishing an SSAS pension scheme.
An SSAS is more flexible and allows much greater control than a SIPP, or other personal pension scheme.
Existing personal pensions can easily be transferred into an SSAS.
A popular use is to sell the company's commercial premises to the SSAS, and rent it back to the company. If necessary this can involve a mortgage for the SSAS (up to 50% of the SSAS' value). Rental income earnt by the SSAS is not taxed.
Alternatively, as in the main thread, the company can borrow from the SSAS, again up to 50% of the SSAS' value, and keeping within HMRC rules.
Interest earnt by the SSAS is not taxed.
Contributions into the SSAS by the company are valid corporation tax deductions. SSAS running costs (practitioner, IFA, legal fees etc) are also valid corporation tax deductions, if paid by the company (optional, can also be paid from SSAS funds instead). Ditto VAT on these payments, if VAT registered.
An SSAS is an occupational pension scheme and can have up to 12 members; this can allow for pooling into a much larger sum to work with.
There are many other investment options for the SSAS, to me the main benefit is the flexibility to invest as and when I want, with the practitioner as a sounding board, who also prepares the annual scheme accounts for HMRC, and generally has my back. And of course, it is so tax efficient.... Read More

Vero

16:54 PM, 28th August 2019
About A year ago

One of the best kept secrets? - The SSAS “Loanback”

Reply to the comment left by Richard Peeters at 28/08/2019 - 08:47
Richard - SSAS schemes are regulated by The Pensions Regulator (SIPPs are regulated by the FCA). Ultimately it is HMRC regulation that restricts how and in what an SSAS can invest. The HMRC rules apply to all.

Once your company has its own SSAS, if you elect to be a scheme administrator, then it is pretty much up to you to make your own investment choices, in line with HMRC rules (in that case, I think Craig and I would both recommend using SSASPractitioner.com as your practitioner).

A good starting place for more information is the Resources section on the SSASPractitioner.com website.

Best of luck.... Read More

Vero

23:51 PM, 27th August 2019
About A year ago

One of the best kept secrets? - The SSAS “Loanback”

Craig - I’ve used ssaspractitioner.com for my company’s SSAS for around 6 years (I am administrator) & would also recommend them.

Peter - an SSAS is not permitted to OWN several categories of investments, including residential property (or jewellery, watches, boats, cars, wine, crypto, etc - anything that can disappear easily without trace).

An SSAS can, however, loan up to 50% of its net funds/assets to the company so that the company purchases the resi property & repays the loan, + interest, to the SSAS within 5 years.

The loan from the SSAS to the company needs to be secured & this is where the detail matters - the security should be structured so that there is zero possibility of the SSAS inadvertently becoming owner of the resi property, should the security ever be called in.
EG if the resi property is to be used as the loan security, then stipulate that the resi property must be sold if the company defaults on the loan, & the sale proceeds paid to the SSAS to cover the loan.

Mistakes can be costly, if not rectified quickly & openly.

I hope that helps.... Read More