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.
This marks the first time since their introduction in 1973 that these vital pension vehicles, specifically designed SSAS was introduced to provide greater flexibility, control, and investment options for small businesses and their owners, while also supporting pension planning in the context of business and personal finances.to support businesses and their owners' long term retirement planning, will be subject to estate taxation.
While the government may aim to encourage pension spending, this approach fundamentally misunderstands the nature and purpose of SSAS funds. They are not just passive savings pots; they are active investment vehicles where 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 the business trades from. This active contribution to economic growth via commercial property provision and business financing is being overlooked.
Our campaign advocates for a policy reconsideration that recognises the unique characteristics of SSAS funds, their crucial role in supporting UK enterprise, and prevents damaging unintended economic consequences.
Forced fire-sales of commercial property SSAS funds often own the factory, shop or office the business trades from. 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 holding 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 After the 40% IHT bite, beneficiaries pay Income Tax when they draw funds—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.
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 officials were unaware pensions could hold property at all - raising doubts that downstream economic damage has been properly modelled.
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 encouraged.