The October 2024 Budget announced a fundamental change to the UK's pension landscape. From April 2027, assets held in Small Self-Administered Schemes (SSAS) – which frequently include the commercial properties leased to the members' own companies or loans made to these businesses – will be included in personal estates for Inheritance Tax (IHT) purposes.
SSASs were introduced by the UK Government in 1973. The intended benefits were explicitly to provide greater pension security and incentives for entrepreneurs by allowing pension funds to be invested in ways that could also support the company’s development.
This is the first time that these vital investment vehicles will be subject to estate taxation. The proposed change fundamentally misunderstands the nature and purpose of SSAS funds. They are not just passive savings pots; they are active investment vehicles, facilitating economic growth and development. Pension capital is often directly tied to the sponsoring business's operational stability and growth, ****for example, through the SSAS owning the factory, workshop, warehouse, office, or shop from which businesses trade.
This active contribution to economic growth via commercial property provision and business financing is being overlooked.
Our campaign advocates a policy reconsideration that recognises the unique characteristics of SSAS funds, their crucial role in supporting UK enterprise, thus preventing damaging unintended economic consequences.
Forced fire-sales of commercial property SSAS funds often own the factory, shop or office from which the business trades . A sudden 40% death-duty bill leaves trustees no choice but to liquidate illiquid assets, frequently below market value, to raise cash for HMRC.
Illiquidity ignored Pensions are supposed to invest long term; the rule assumes every asset can be turned into cash overnight. That misreads the reality of commercial real estate and risks evicting viable firms from their own premises.
Punitive double taxation In order to pay the 40% IHT, beneficiaries must draw down funds from the SSAS which are subject to income tax (45%). The result —an effective rate that can exceed 67%
Retrospective breach of trust Successive governments encouraged entrepreneurs to use SSAS as a prudent mix of retirement saving and business finance. Imposing a confiscatory levy after decades of that guidance is a profound policy U-turn. The IHT is retrospective because the proposed change will tax not only the profits made by the SSAS but original sums put into the SSAS on the promise that they were to be tax-free.
No seven-year gifting escape Unlike most personal assets, a SSAS property or loan cannot be transferred during life to fall outside the estate. Death is the only transfer point.
Unique structural disadvantage The “gifting trap” makes SSAS members pay a tax their peers can legally avoid with other assets. The playing field tilts against those who followed official pension advice.
Stifled investment and growth Trustees are freezing property purchases, refurbishments and development projects because a future tax bill could wipe out returns.
Policy made in ignorance Evidence from consultations suggests Government officials were unaware pensions could hold property at all - raising fears that downstream economic damage has not been accounted for.
Disruption of trading businesses and local jobs Tenant SMEs, including the sponsoring employer, may be forced from their workplace if the SSAS must sell the property to settle IHT.
Identical asset, different relief The same premises qualify for Business Property Relief when held directly by the company, yet receive none when owned via a SSAS, penalising productive firms and their landlords for using the very pension vehicle government policy has encouraged for over 50 years.