SSAS Case Study: Improve Business Cashflow

How To Improve Business Cashflow With A SSAS Loanback

Combining An Old Pension With A New Contribution Allowed Trevor To Generate Increased Cashflow For His Business

As Trevor’s business continued to prosper, he expected to make a decent pre-tax profit.  However, the high demand on cashflow began to stifle the business’ rapid expansion.

Trevor has money invested in a personal pension taken out many years ago.  In addition to his contributions, he used it to contract out of the State Earnings Related Pension Scheme.

Trevor established a SSAS for his business and funded it with the transfer in of his personal pension. 

Trevor’s company made a substantial pension contribution for him, significantly increasing the total value of the SSAS. 

Rather than have the SSAS provider fees paid from within the SSAS, he chose to pay them from his business for two reasons:

  • 1. It left more money invested in his tax privileged SSAS
  • 2. As his business is VAT registered, it could reclaim the VAT

To enable to business to continue to grow, the SSAS granted a loanback to Trevor’s business. 

The loanback advanced was equal to the contribution the business had just contributed for Trevor.

It meant that other than the SSAS fees, the net cost to the company was neutral.

The loanback was arranged over five years, on a capital and interest basis, at a competitive interest rate of 3 per cent above base.  Trevor secured the loanback with a charge over some land he owned personally.

Trevor chose to invest the balance of his SSAS fund in a range of stockmarket assets, some cash deposits and a small amount of peer-to-peer lending.

Trevor improved the cashflow position of his business using a loanback, by wiping out the business’ Corporation Tax bill.

The SSAS was diversified across a range of asset classes in line with Trevor’s investment choices.  The loanback interest was paid directly into the SSAS, growing the value of Trevor’s fund in the process.

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