Contributions of physical assets (In Specie Contributions)
'In Specie' is a Latin term meaning 'in the actual form.'
Transferring an asset 'in specie' means to transfer the ownership of that asset from one person/company/entity to another person/company/entity in its current form, i.e. without the need to convert the asset to cash.
It is possible for companies to agree to pay a monetary contribution and then to settle this debt by way of a transfer of assets; in effect the contribution is made as the transfer of a non-cash asset. As this is an employer contribution, full Corporation Tax Relief is available.
Prior to the contribution being made, SSAS Practitioner.com must have written confirmation (an ‘application’) from the employer detailing the value of the contribution they wish to make. This then creates a debt which the employer must legally settle.
Once we agree that the contributions are allowable, and confirm that they are within HMRC limits, the contribution debt may be settled by transfer of assets to the same value. Employers need to confirm the monetary amount they wish to contribute, and then settle the debt by, for example, transfer-in of a property. This will incur solicitors fees, but no extra fees from SSAS Practitioner.com. Solicitors can split titles, if desired, thus enabling a part of the property to be transferred at any given time in order to keep the transaction within HMRC limits.
If the contribution is via the transfer of shares, we require from the investment manager a description of the stock, quantity of stock and the approximate value of stock. If the contribution is of property, we require a property valuation from a FRICS-approved surveyor.
We check that the asset is an allowable scheme investment and also that the ‘gross’ value of the contribution does not exceed contribution limits.
Care needs to be taken with the contribution of assets and continual guidance from SSAS Practitioner.com is required.