SSAS Case Study: SSAS Sale And Leaseback

What You Need To Know About SSAS Sale And Leaseback

Using Your SSAS To Finance Your Business Through Sale And Leaseback Can Pay Huge Dividends For Your Business

Intellectual Property (IP) is a permitted by HMRC for SSAS funding.  The most commonly recognisable IP assets are patents, trademarks, designs, copyrights, databases and domain names.

Once identified, the IP needs to be valued by an independent expert to meet HMRC requirements.

The asset can then be used either as collateral for a SSAS loan to the company.  Or it can be purchased by the SSAS from the business on a ‘sale and leaseback’ arrangement.

As well as injecting fresh capital into the business, once it’s been purchased by the SSAS, it’s safely held within a creditor-protected pension environment.

Further benefits include the fact that any appreciation in the value of the IP, or the income derived from lease or licence agreements, is free from direct taxation.

Sale and Leaseback is available to all businesses.  However, the associated costs generally mean you need to have at least £50,000 in your SSAS for it to be cost effective.

A detailed assessment of your company accounts, track record, business plan and funding structure is carried out by a SSAS specialist. 

Assuming your business is sustainable, an independent specialist valuer will be commissioned to value the IP. 

Once the value has been established, the SSAS agrees to buy some or all of the assets from the business.

The SSAS releases the agreed sum to the company.  In return, the company makes lease payments back to the SSAS, usually on a monthly basis, over five years. 

The whole process takes between three and eight weeks to complete.

What Are The Key Points To Consider?

Whilst all business carries an element of risk, one of the biggest problems facing many businesses is the banks' lack of enthusiasm for lending.

Funding your business through 'sale and leaseback' reduces and can remove this risk entirely as it doesn’t require a third party to approve or renew the facility.

Not only does it leave all your other borrowing facilities in tact, it provides genuine stability and control for you, the business owner.  That’s because your SSAS is unlikely to 'call in' your business funding!

The risks associated with 'sale and leaseback' are comparable to traditional commercial lending.  But with 'sale and leaseback', you're in control.

Although protected from external creditors, if your business defaults, your SSAS may suffer a loss.  In the worse case, the value might have to be written off.

It's not just your business that could suffer, your retirement could look more bleak too.  But the potential loss could be lot less than traditional funding. 

With most traditional funding methods, not only could you be liable to pay back the loan, all your other assets may also be at risk, if you've given personal and director guarantees.

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