How Profitable Business Owners Can Utilise Profits to Accelerate Business Growth and Build More Wealth

Recent changes announced in the UK budget have left business owners feeling under attack.

With rising costs of employment, reductions in tax breaks to sell a successful business and escalating operational costs to name a few, running a business is becoming harder and more expensive. If you’re a profitable business owner, these challenges mean it’s more important than ever to think creatively about safeguarding and growing your wealth. One powerful yet often overlooked tool for this is the Small Self-Administered Scheme (SSAS) pension.

Don’t switch off here because you’ve heard the word ‘pension’! – SSAS is unlike any pension you’ve ever had before. It’s just like having another business, but one uniquely shaped to help fund and support your current and future business goals whilst making a pension a genuine and valuable part of your wealth.

 This article explores how a SSAS pension can help you protect your profits, reduce your tax burden, and build a fantastic family legacy—all while giving you greater control over your financial future.

Leveraging Your Business for Maximum Profit

Successful entrepreneurs understand the importance of leverage. Leverage isn’t just about money; it’s about optimising your time, people, and systems to maximise profits. Whether it’s automating processes, building high-performing teams, or utilising cutting-edge technology, leverage creates exponential results.

However, if you’re not leveraging your business profits effectively to secure your future, you’re leaving money on the table. Here’s where a SSAS pension steps in, transforming your hard-earned profits into a tax-efficient, multi-generational wealth-building vehicle.

Unlocking Old and Current Pensions with a SSAS

Many business owners have old or current pensions, often locked away in traditional schemes offering limited control and flexibility. By transferring these pensions into a SSAS, you can unlock their potential and take full advantage of the SSAS's unique benefits, bringing previously unloved or even forgotten but valuable money back into play.

Traditional pensions often restrict where your funds can be invested, mostly utilising the stock market as the only way to grow and so limiting your opportunities.

You’ve probably used the phrase ‘my business is my pension’ at some point. Entrepreneurs often don’t trust the markets, with their volatility and unpredictability and so it’s easy to see why many have never truly bought into the idea of pensions as a real way of building wealth.

With a SSAS, you gain full control, allowing you to direct these funds into assets that align with your business and financial goals.

Transferring existing pensions into a SSAS not only provides greater flexibility but also allows you to compound wealth faster and more effectively.

What Is a SSAS Pension?

 A SSAS pension is a unique trust-based pension scheme specifically designed for business owners of limited companies. Unlike traditional pensions, it offers unparalleled flexibility, control and tax benefits, making it a strategic tool for creating long-term wealth and financial independence.

Here’s why every profitable business owner should consider a SSAS pension:

1. Unmatched Tax Benefits

 SSAS pensions provide substantial tax advantages that no savvy business owner can afford to ignore:

•          Corporation Tax Savings: Contributions made from your company to the SSAS are treated as a business expense, reducing your corporation tax liability.

•          Tax-Free Growth: Once funds are in the SSAS, all income and gains grow free from income tax and capital gains tax, meaning your investments can compound over time without any tax drag.

•          Tax-Efficient Withdrawals: From age 55 (57 from 2028), you can withdraw up to 25% of your SSAS fund as a tax-free lump sum, and at any time thereafter the remaining funds are taxed at your marginal rate but only when you want to draw them.

2. Collaborative Wealth Building

A SSAS pension isn’t just for you. It can also include up to 11 members, allowing you to:

•          Collaborate with Business Partners: Pool resources with other directors or business partners to invest collectively, amplifying your financial impact.

•          Create a Family Legacy: Involve your spouse, partner, and even adult children in the SSAS. This not only ensures your wealth remains within the family but also provides an opportunity to pass on financial knowledge and values to the next generation.

•          Inheritance Tax Mitigation: Unlike traditional pensions, a SSAS offers unique strategies to mitigate inheritance tax, making it an effective vehicle for preserving wealth within the family.

3. Control and Flexibility

With a SSAS, you have full control over where and how your pension funds are invested. This flexibility opens up a range of opportunities that align with your business and financial goals:

·         Invest in Commercial Property: Use your SSAS to purchase your company’s commercial premises, paying rent directly into your pension—a tax-efficient way to boost your retirement fund.

·         Loan back Facility: Borrow up to 50% of the SSAS’s value to reinvest in your own business or acquire new ones, providing a low-cost, tax-efficient way to access capital.

·         Lending to Other Businesses: Support other entrepreneurs while earning a strong return on your SSAS funds.

·         Utilise Any Other Investment: SSAS can also invest in any other allowable investment type, such as cryptocurrency, stocks, funds, cash deposits, crowdfunding and gold.

Why SSAS Is a Family Wealth Vehicle

A SSAS isn’t just a pension—it’s a financial hub that can transform how your family builds and preserves wealth. Here’s how:

1. Involving Your Spouse or Partner

By including your spouse or partner in the SSAS, you can pool contributions and collectively invest in opportunities that align with your shared financial goals. This collaborative approach not only strengthens your family’s financial position but also ensures a united strategy for wealth creation.

2. Engaging the Next Generation

 Adding adult children to the SSAS offers a unique opportunity to:

• Share financial education and investment principles.

•          Allow them to contribute to and benefit from the SSAS over their lifetime.

•         Provide a seamless transition of wealth between generations, utilising its unique ability to mitigate inheritance tax.

Key Investment Opportunities with a SSAS Pension

A SSAS pension allows you to invest in a wide range of assets, giving you the flexibility to tailor your investments to your business and financial strategy:

1. Buying Commercial Premises

 If your business operates from a commercial property, you can use the SSAS to purchase the premises. This offers several benefits:

•          If you already own the property, you can sell it to the SSAS, freeing up capital while maintaining control of the asset.

•          Rent paid by your business to the SSAS is tax-deductible for the business and tax-free for the pension.

•          Leveraging the value of old pensions and tax-relieved profit to buy a new business premises and stop paying rent to somebody else is a brilliantly powerful leverage. Or, be a landlord for somebody else's business.

2. SSAS Loanback

Need funding for your business? The SSAS can lend back up to 50% of its value to your company. This loan is:

•          Fully secured with a fixed interest rate.

•          Tax-efficient because the repayments (both interest and capital) flow back into your SSAS, allowing these funds to be reinvested and grow within the tax-advantaged pension structure. The interest is tax deductible for your business, too.

3. Collaborative Investments

With multiple members, a SSAS can pool resources to invest in larger opportunities, such as commercial developments, joint ventures, or business acquisitions.

Who Should Consider a SSAS Pension?

 If your business generates more profit than you need to fund your lifestyle, you should seriously consider a SSAS pension. Here’s why:

• It allows you to transform surplus profits into tax-free, long-term wealth.

•        It provides a robust framework for family wealth planning and collaboration.

•        It offers unparalleled flexibility and control over your investments.

•        It helps you navigate the increasing tax and regulatory pressures on business owners.

Final Thoughts

In a challenging economic environment, profitable business owners need to think strategically about preserving their wealth and securing their family’s financial future. A SSAS pension is one of the most powerful tools available for doing just that.

If you’re a UK Limited Company business owner with excess profits or existing pensions, don’t leave your financial future to chance. Discover how a SSAS pension can empower you to build a tax-efficient family legacy and provide unmatched control over your wealth. To learn more, contact the experts at WealthBuilders today and download our free SSAS ebook.