Pension lending to / Director borrowing from Ltd Co
Pension lending to / Director borrowing from Ltd Co
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foliedouce

Original Poster:

3,095 posts

262 months

Tuesday 12th April 2016
quotequote all
Does anyone have any knowledge of the newish rules re loans to / from a Ltd company?

Specifically a pension (SIPP) lending to the business. I didn't even think this was possible but I got a marketing email today saying it could be done. We're looking to leverage up to acquire some other businesses and my thinking is better to take the interest personally than pay it to the bank.

Also, when borrowing money from your Ltd company I was under the impression it had to be paid back by Septempter of the folloing year otherwise tax was due as if it was drawings. I hear that the law has been tightend up so that the agreement between the individual and the company has to be on a more formal commercial basis. Does this mean the pay back by September 'rule' has been relaxed? ir you could borrow the money over say 36 months as long as there was a formal agreement with interest?

Thanks

PurpleMoonlight

22,362 posts

188 months

Tuesday 12th April 2016
quotequote all
A SIPP cannot lend to your Ltd, you need a SSAS for that.

Assuming you establish a SSAS instead the rules are:

Maximum loan of 50% of SSAS assets.
Over a maximum of 5 years.
Interest at 1% over base.
1st charge security obtained.

foliedouce

Original Poster:

3,095 posts

262 months

Tuesday 12th April 2016
quotequote all
Thanks, that appears to be that idea out the window then.

I'd never even heard of a SASS before, but just having a quick google it looks like a great solution for a family business.


Jockman

18,414 posts

191 months

Tuesday 12th April 2016
quotequote all
We had a SSAS until 2005 ish and we borrowed from it to fund our commercial property acquisition in May 2001 - small family business too.

We needed an Administrator in those days - Scottish Provident / Abbey / Santander IIRC and I did my own Annual Accounts for it. Cater Allen? was the Bank Probably similar rules now.

The notional earmarking was useful when parents retired and it was a useful way of paying additional interest into the Pension pots.

We eventually closed it, moved on to GPPs then SIPPs which - ironically - ended up buying the entire property from us recently.

A very useful tool and I should have considered it before SIPPs tbh but the cost of converting now seems excessive.