SSAS Loan Back Facility
An authorised Loan to a Sponsoring Employer
The notes below are intended as a summary of the lending criteria as laid down by the Finance Act 2004 as far as it relates to a, “Sponsoring Employer” and are based upon the relevant legislation and HM Revenue & Customs Guidance at the time of issue. Great care has been taken in preparing these notes and it should be appreciated that only the Courts can authoritatively interpret the law, and therefore GPC cannot accept responsibility for any reliance placed on its contents.
HMRC allow a loan from a SSAS to the Principal Employer of that SSAS on the condition that it must be a genuine investment of the pension scheme. The investment should be prudent, secure and on a commercial basis.
Loans to a Principal Employer
The key requirements to a loan are:
- The amount must not exceed 50% of the net scheme assets of the scheme at the time the loan is made.
- The maximum term of the loan is 5 years.
- The rate of interest on the loan must be a minimum of 1% above the average base lending rate of the 6 clearing banks.
- Bank of Scotland
- National Westminster
- Royal Bank of Scotland
- Lloyds TSB Plc
Rounded up to the nearest 0.25%.
- The loan must be repaid in equal instalments of capital and interest for each year throughout the term of the loan.
- The loan must be secured as a first charge on an asset of the principal employer or another party which will secure the loan throughout its term. This must be at least of equal value to the face value of the loan including interest. A valuation of the asset is required and a formal legal charge will be put in place.
- A loan agreement is a legal contract. Therefore GPC SIPP will utilise the services of a panel solicitor.
Please refer to our SSAS fee schedule. In addition to these fees there may be fees to other advisors such as a panel solicitor to draw up the loan agreement and registering a first charge on a security.
Due to the complex nature of loans we request that you email firstname.lastname@example.org with the proposed details of the loan.