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.

Please Share This

If you’ve found this page of interest, please would you kindly send a link to it to your friends and colleagues using the buttons below.  You’ll be helping us out, and they might appreciate it too.  Thanks, it's much appreciated.

Share on LinkedInShare on FacebookTweet about this on TwitterShare on Google+Email this to someone
 

AJ Bell Is The Best Value SIPP For Stockmarket Assets

That's our opinion.  Not just because AJ Bell was the first company to offer an online SIPP.  Nor that it's received many prestigious awards.  And not even because the wife of SIPPclub's Founder has an AJ Bell SIPP.  It's because it's one of the most competitive stockmarket SIPPs on the market. 

Over time, charges can wipe out a huge part of your fund.  We like AJ Bell because there are no set-up costs.  If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund.  And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment).

Visit AJ Bell

Get SIPP And SSAS Insights Direct To Your Inbox every Monday (It's FREE!)



IMPORTANT NOTE: NOTHING FEATURED ON SIPPclub IS EITHER AN IMPLIED OR A SPECIFIC RECOMMENDATION TO MAKE, OR TO REFRAIN FROM MAKING A FINANCIAL DECISION.  THIS PAGE HAS NOT BEEN APPROVED AS A FINANCIAL PROMOTION.

As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment within it is right for you. Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence. If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk.  Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.

Please read our full Terms which includes criteria for SIPPclub membership.