Case study

Buying property and leasing it back to the principal employer.

The cornerstone of SSAS planning!

A small family-owned recruitment business, supplying employee's to companies in the Hull area, became too big for its current premises and was looking to purchase a bigger property, but didn’t want to tie up too much of its capital in the purchase. The company also wanted to minimise its borrowing from the bank and to purchase the new premises in as tax efficient a manner as possible.

The two owners of the business, a husband and wife, met with their financial adviser to discuss the issues. The adviser subsequently contacted SSAS and agreed that having a SSAS with SSAS would be the best way to deal with these objectives. The SSAS would be controlled by the family, who are both the members and the trustees of the scheme. 

After setting up the SSAS, a contribution was paid in from the recruitment business, the principal employer. The payment was used as a deposit to buy the new property from which the expanded business would be run. The remainder of the monies required to purchase the property were borrowed by the SSAS via a mortgage (see our SSAS borrowing repayment calculator on the SSAS-related calculators page ). The SSAS then leased the property back to the recruitment business at a commercial rent, payable to the SSAS. Part of the rent was used to service the mortgage in the SSAS. As the rental income and capital gains within a SSAS are tax exempt, coupled with the fact that company contributions for family members attract corporation tax relief, the use of a SSAS was the perfect solution.