IHT and SSAS UK: Inheritance Tax on Small Self-Administered Schemes for Company Directors (2026)
A SSAS is currently outside the IHT estate — held by scheme trustees under a discretionary trust. From 6 April 2027, Budget 2024 changes will bring unused SSAS funds into the IHT estate. The window before April 2027 is a significant opportunity for company directors to maximise contributions, review nominations, and plan for the new pension IHT regime.
| Feature | IHT Position (to Apr 2027) | IHT Position (from Apr 2027) |
|---|---|---|
| SSAS pension fund (undrawn) | Outside estate | In IHT estate (new rules) |
| SSAS loanback to employer | Outside estate (SSAS asset) | In estate via pension rules |
| Commercial property in SSAS | Outside estate (pension trust) | In estate via pension rules |
| Employer contributions to SSAS | Reduces company estate (CT deduction) | Pension in estate but window closing |
| SSAS death benefits (under 75) | Outside estate; tax-free income | IHT payable from fund first |
| SSAS death benefits (over 75) | Outside estate; income tax on receipt | IHT + income tax on death benefits |
SSAS and IHT: What Every Director Needs to Know
What is a SSAS and who can use it?
A Small Self-Administered Scheme (SSAS) is an occupational defined contribution pension scheme established by a company for its directors and key employees. Unlike a SIPP (which is a personal pension), a SSAS is established by the employer company and is governed by pension scheme trustees (typically the company directors themselves, plus a professional pensioneer trustee to meet HMRC requirements). Eligibility: SSASs are available to owner-managed businesses, family companies, and companies with a small number of key directors or employees. The scheme members are typically the controlling directors of the company. Key features that distinguish a SSAS from a SIPP: (1) Employer loanback: the SSAS can lend up to 50% of its total assets back to the sponsoring employer company, secured on first-charge basis, at a commercial rate of interest — providing the company with a source of finance. (2) Commercial property: the SSAS can purchase commercial property (including the company's own business premises), which are let back to the company on commercial terms. The property is held within the SSAS pension wrapper — growing tax-free. (3) Employer company shares: the SSAS can hold shares in the sponsoring employer company (up to 5% of the SSAS fund). (4) Collective investments: unlike SIPPs, SSAS funds are pooled across all members — investment decisions are made collectively.
SSAS and IHT: the current position (before April 2027)
Until 6 April 2027, a SSAS operates under the same IHT treatment as a SIPP and other registered pension schemes: the pension fund is held by the scheme trustees under a discretionary trust — it is not the personal property of the member. On death, the trustees exercise their discretion to pay death benefits (lump sum or income) to the member's nominated beneficiaries. Because the scheme trustees (not the member) own the fund, it is not included in the member's IHT estate. The death benefits paid by the trustees to beneficiaries are typically free of IHT (though the trustees' payments may be subject to income tax if the member was over 75 at death). For company directors, the SSAS can represent the largest single asset outside the IHT estate — sometimes exceeding the value of their company shareholding. Maximising contributions to the SSAS (within annual allowance limits) is therefore one of the most effective IHT planning tools available to company directors: it moves wealth from the IHT estate into the pension (outside the estate) while also providing corporation tax relief on employer contributions.
April 2027: Budget 2024 changes bring SSAS into the IHT estate
The Autumn Budget 2024 announced that from 6 April 2027, unused pension funds (including SSAS) will be included in the deceased's estate for IHT purposes. The mechanics: the SSAS death benefits will be reported to HMRC as part of the estate; the personal representatives (not the pension trustees) will be responsible for IHT on the pension element; IHT of 40% will apply to the portion of the pension above the available NRB (after other estate assets). The pension trustees will then pay the relevant IHT from the pension fund before paying the balance to beneficiaries. Key planning implications before April 2027: (1) Consider taking benefits from the SSAS before April 2027 — moving funds out of the pension (into the estate) is not automatically bad if the funds can then be given away as PETs or reinvested in BPR-qualifying assets. (2) Review nominations: ensure nominations are up-to-date and reflect current wishes — after April 2027, the IHT calculation will depend partly on how the pension is structured. (3) Consider whether drawdown rather than a lump sum on death changes the IHT exposure — detailed HMRC guidance on the April 2027 rules is expected before implementation.
Employer loanback: IHT planning for the company
The SSAS loanback feature allows the scheme to lend up to 50% of its total fund value to the sponsoring employer company (secured on a first charge over company assets, repayable within 5 years or on commercial terms). For IHT planning: the loanback does not remove funds from the SSAS pension (they are still in the pension — outside the estate until April 2027). The loanback provides the company with finance that it uses to grow the business. Growth in business value accrues in the company, where BPR (s105(1)(bb) IHTA 1984) may apply to the company shares. The combination of SSAS contributions (reducing the estate) and loanback (providing company finance to grow BPR-qualifying assets) creates a double IHT efficiency: funds move from the taxable estate into the pension (outside IHT), then the company uses the loanback to grow BPR-qualifying value. Post-April 2027: the SSAS will be in the IHT estate — but BPR on company shares (if qualifying) still provides relief on the company-side of the structure. The loanback's IHT benefit diminishes after April 2027 when the pension itself enters the estate.
Commercial property in a SSAS: IHT considerations
A SSAS can hold commercial property — often the company's own business premises. The property is held within the pension trust (outside the member's IHT estate until April 2027). For IHT planning, the key consideration is: does the property qualify for BPR (as property used for the purposes of the business under s105 IHTA 1984)? Commercial property held within a SSAS is held by the pension trustees — it is not personal property of the member and therefore does not qualify for BPR (BPR applies to the member's business property, not to property owned by a pension trust). However, by holding the business property in the SSAS, the member keeps it outside the IHT estate altogether (no BPR needed — the pension trust structure achieves IHT protection until April 2027). After April 2027: the commercial property within the SSAS will be caught by the new pension IHT rules. The property (as part of the SSAS fund) will be included in the estate. BPR on pension-held commercial property is not expected to be available under the new rules — HMRC is consulting on the detailed mechanics.
Nominations, expression of wishes, and SSAS IHT
As with SIPPs, the SSAS trustees have absolute discretion over who receives death benefits — the member's nomination (expression of wishes) is not legally binding but is taken into account by the trustees. The nomination is critical for IHT planning: correctly completing and regularly updating a nomination ensures the pension funds pass to intended beneficiaries efficiently; the trustees know the member's intentions and can act promptly on death; for the April 2027 rules, the nominated beneficiaries and the form of benefit (lump sum vs drawdown) may affect the IHT calculation. Review and update SSAS nominations: (1) After any change in family circumstances (marriage, divorce, birth of children, death of a beneficiary); (2) When the size of the pension pot changes significantly (particularly approaching April 2027, when the IHT treatment changes); (3) To align with the will — though nominees should not necessarily mirror beneficiaries (the pension may need to flow differently from the estate to optimise the overall tax position). After April 2027, the IHT position of the pension means that coordinating the will, the pension nominations, and any other estate planning is more important than ever.
Frequently Asked Questions
Is a SSAS included in the IHT estate?
Currently no — until 6 April 2027. A SSAS is held under a discretionary trust by the scheme trustees. It is not the member's personal property and is not included in their IHT estate. From 6 April 2027, Budget 2024 changes will bring unused pension funds (including SSAS death benefits) into the IHT estate. The personal representatives will be responsible for reporting and paying IHT on the pension element, with the trustees paying IHT from the fund before distributing to beneficiaries.
What are the IHT advantages of contributing to a SSAS?
Employer contributions to a SSAS: reduce the company's taxable profit (corporation tax deduction); move value from the company (which is in the estate via the director's shares — potentially BPR-protected) into the pension (outside the estate until April 2027). Personal contributions: eligible for income tax relief (reducing personal income); move wealth out of the estate into the pension. The window before April 2027 is particularly valuable — pension contributions made now can build up outside the estate for a period before the new IHT rules apply.
Can a SSAS lend money to the company it belongs to?
Yes. A SSAS can lend up to 50% of its total fund value to the sponsoring employer company (the loanback). The loan must be secured on a first charge over company assets, repayable within 5 years, at a commercial interest rate. The loanback provides the company with finance while the funds remain in the pension (outside the IHT estate until April 2027). It does not remove the money from the pension — it is a pension scheme investment in the form of a secured loan to the company.
What happens to a SSAS on the member's death?
The SSAS trustees exercise their discretion to pay death benefits to nominated beneficiaries. If the member died under 75: lump sum and income death benefits can be paid free of income tax. If the member died over 75: death benefits are taxed as income in the hands of the recipient. Until April 2027, SSAS death benefits are generally outside the IHT estate. From April 2027, the unused pension pot (including SSAS) will be reported as part of the estate for IHT, with IHT payable from the fund before distribution. Nominations: update regularly; the trustees consider but are not bound by the nomination.
Should I drawdown my SSAS before April 2027 to avoid the new pension IHT rules?
This is a complex, individual decision. Drawdown before April 2027 moves funds from the pension (outside the estate until then) into your personal estate — where they are subject to IHT at 40% unless given away as PETs or invested in BPR-qualifying assets. Whether this is beneficial depends on: your current IHT estate size; the expected value of the pension fund; your life expectancy; your ability to make PETs or reinvest in BPR-qualifying assets. For many directors, the pension fund is large and the estate already well above the NRB — drawdown to fund PETs or AIM/EIS reinvestment before April 2027 may be worthwhile. Obtain specialist pension and tax advice before making irreversible drawdown decisions.
Align Your Will with Your Pension Nominations
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