Roderick Ramage, solicitor, www.law-office.co.uk
published by distribution to professional contacts on 12 April 2021
This article is not advice to any
person and may not be taken as a definitive statement of the law in general or
in any particular case. The author does
not accept any responsibility for anything that any person does or does not do
as a result of reading it.
SSAS remains the popular term for the type of scheme defined as such in the
it is an
occupational pension scheme, as defined in the Pension Schemes Act 1993, s1;
it has fewer than 12 members; and
all its members are trustees of the scheme and either
the provisions of the scheme provide that all decisions which fall
to be made by the trustees are made by the unanimous agreement of the trustees
who are members of the scheme, or
the scheme has a trustee who is independent for the purposes of
(with corresponding requirements for directors
of a company which is the sole trustee of the scheme).
(self-invested pension plan)
SIPP is a personal pension scheme defined in the Pension Schemes Act 1993, s1 as a
pension scheme that
is not an
occupational pension scheme, and
(b) is established
by a person with permission under the ().
its simplest a personal pension scheme
is a contract between an individual and an insurance company or other
provider. An employer is not party to a
personal pension scheme, but may and usually does contribute to them and might
organise the provision of personal pensions through a grouped personal pension
establishment and registration
An employer, which (or who) can be anybody, may establish a SSAS, and the SSAS’s trustees must then register it with HMRC. A SIPP may be established only by person with permission under the
differences between a SSAS and a SIPP are that:
a SIPP does not have an employer, and if an employer contributes to
it for the benefits who is a member of a SIPP, it does so not under the SIPP’s
terms but member’s the member’s terms of employment;
a SSAS holds its assets collectively for all the members, so
individual members have only a notional interests in them or any part of them,
but assets held in a SIPP are held for its member; and
a SSAS may provide defined benefits.
and employer authorised payments are listed in the FA 2004, s160 and s175. Unauthorised payments are not prohibited, but
are subject to tax charges.
the FA 2004 s161(5) a payment by a registered pension scheme to or in respect
of a person who is connected with member or former member or a sponsoring
employer connected with such a person,
is treated as made to the member or former member or sponsoring employer.
general the trustees of a SSAS may make any investment that they select, but
the range and type of investments that may be held in a SIPP might be
restricted by the provider. Both are
investment regulated schemes subject to the FA 2004 s174A and sch 29A (see my
taxable property update of 14/10/20).
related investment and loans
SSAS, as an occupational pension scheme, is subject to more than 5% of their
investments in employer-related investments and any of their investments in
employer-related loan. These
restrictions do not apply to a small scheme, which therefore may hold employer
related investments and make loans to the scheme employer. Loans to the scheme employer are taxable
unless they are “authorised employer loans” under s179 (see my borrowing and
lending update 17/10/18).
s171(4) a loan by a pension scheme (SSAS or SIPP) to member or former member is
not an authorised payment.
payment to acquire shares in the scheme employer is taxable if the market value
of the shares acquired is 5% or more of the market value of the scheme’s
investments or the total value of the shares held by the scheme is 20% or more:
FA 2004 s180.
As a SIPP is not an occupational scheme neither
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