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Your business can contribute to the SSAS and may obtain tax relief on the payment. Contributions for the company are calculated at the company’s marginal rate of corporation tax and are paid gross.
Business contributions are discretionary with no upper limit, however, provided a company has enough pre-tax profit a contribution up to £500,000 in a single tax year may be made with the saving in corporation tax applied to the tax year of the contribution.
The technical stuff
The general principle for business contributions to any SSAS is that tax relief is available without limit, provided the contributions meet the normal rules for allowable deductions. This means they must meet the ‘wholly and exclusively’ for purposes of trade test.
Relief is given in the accounting period in which the contribution is paid, except where where a loss is created that can be carried back or where a large one -off contribution is subject to spreading for tax relief purposes.
A business contribution is spread if:
- It exceeds 210% of the contribution paid in the previous chargeable period; and
- The amount of the excess (defined as the amount paid over and above 110% of the contribution paid in the previous chargeable period) is £500,000 or more
A business contribution is not spread to the extent that the increased contribution is attributable to the funding of:
- Cost of living for pensioner members; or
- Future service liability for new scheme entrants
Non Allocated Contributions
Where there are two or more members in a SSAS, contributions paid by the business can be non- allocated, this can allow for tax planning where the business is seeking to pay more than the annual allowance for the current year. We can give specialist guidance on this.