SSAS Loanback Q&A

30th April 2020 · in Newsletters

Small self-administered scheme (SSAS) queries have continued to rise over the course of the past month, particularly in relation to the scheme’s loanback feature, which allows the SSAS to loan funds to the scheme’s sponsoring employer at competitive rates.

Here we have put together some of the most frequently asked questions:

Can I lend money from my SIPP to my company?

No – Only a Small Self-Administered Scheme (SSAS) can lend funds to a sponsoring employer.

Does the loan have to be secured?

Yes – The loan must be secured on a first charge basis against a suitable asset that’s value exceeds the loan value plus the total accrued interest for the term of the loan. An formal valuation from an independent, qualified person will be required to confirm value.

What can be used as security?

We allow loans to be secured against unencumbered UK commercial property and land, and in certain circumstances against the sale proceeds of UK residential property.

What about the interest rate?

The minimum interest rate that can be applied is 1% above base rate, rounded up to the nearest 0.25% (so 1.25% minimum currently)

What is the maximum that I can lend?

The SSAS can lend up to a maximum of 50% of its’ net asset value.

What is the maximum term of the loan?

5 Years.

Is the loan structured on an interest only basis?

No – loans must be structured on a repayment basis with regular repayments of capital and interest payable at least annually.

If you have any further queries, then please follow this link to see our loanback case study or call your usual contact at Talbot and Muir