SSAS Property Finance
The Complete UK Guide

A Small Self-Administered Scheme (SSAS) is an occupational pension scheme typically set up by a company for its directors. Unlike a standard company pension where the provider chooses the investments, an SSAS allows the member trustees to choose from a wider range of assets — including commercial property.

When an SSAS purchases commercial property, the property becomes an asset of the pension scheme. The SSAS trustees hold legal title to the property, and any rental income or capital gains flow back into the pension scheme, growing tax-free until members begin drawing their pensions.

This creates a powerful tax-planning opportunity for company directors in particular: the sponsoring employer can rent its commercial premises from the SSAS, turning what was a business expense into a pension contribution. The rent is tax-deductible for the business and tax-free within the SSAS. Multiple members can pool their assets for larger acquisitions.

Under current HMRC rules, an SSAS can borrow up to 50% of the net value of the scheme's assets at the time of borrowing. This borrowing can only be used for the purpose of acquiring an asset — typically commercial property.

For example, if your SSAS holds £500,000 in investments, you could borrow up to £250,000, giving you a combined purchasing power of £750,000 for commercial property. With multiple members pooling assets, the purchasing power can be significantly greater.

The loan must be from a bona fide third-party lender (not from members or a connected party), and the property itself usually serves as security for the loan. Interest rates and terms are negotiated with the lender, with typical terms ranging from 5 to 25 years.

One of the unique advantages of an SSAS over other pension schemes is the ability to make a loanback to the sponsoring employer. This allows the scheme to lend up to 50% of the net scheme assets back to the company.

The loanback must comply with strict HMRC rules: the loan must be repaid within 5 years with equal instalments of capital and interest, the interest rate must be at least 1% above the average base rate, and security of at least the loan value plus 10% must be provided (typically a first charge on a company asset).

This facility provides an additional source of business finance while simultaneously growing the pension scheme through interest payments.

One of the key benefits of SSAS property ownership is the ability for a connected party — such as the sponsoring employer — to lease the property from the SSAS. This is specifically permitted under HMRC rules, provided the transaction is conducted at arm's length (i.e., at market value).

The rent must be set at a market rate, typically supported by an independent surveyor's valuation. The rent should be reviewed regularly (usually every 3-5 years) to ensure it remains at market level.