SSAS or SIPP for company directors

A small self administered scheme (SSAS) and a self invested personal pension (SIPP) get exactly the same tax reliefs, allowances and benefit rules. The real differences are structural: a SSAS is an occupational trust scheme set up by your company with you as a trustee, and only it can lend to your company or buy a limited stake in it, while a SIPP is a personal pension run by an FCA authorised operator, which takes the administration off your hands but cannot lend to your business.

Tax investigation insurance from £108.75 a year (£9.06 a month).Pays up to £100,000 of your accountant's fees if HMRC opens an enquiry. No excess. Buy online in a few minutes.

See my price in 2 questions How the cover works Accountant? Offer cover to your clients or call 01795 841 310

What is the basic difference between a SSAS and a SIPP?

A SSAS is an occupational pension scheme. Your company establishes it, acts as its sponsoring employer, and the members (usually the directors and sometimes family members who work in the business) normally act as trustees. To be registered with HMRC the scheme must have a scheme administrator, the person appointed under the rules to carry out the duties in Part 4 Finance Act 2004 (PTM151000). Every person who makes up the scheme administrator must be a fit and proper person, and HMRC can refuse to register a scheme, or later deregister it, if that test is not met (PTM153000).

A SIPP is a personal pension scheme. Establishing, operating or winding up a personal pension scheme is a regulated activity under article 52 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, so the operator must be authorised by the FCA. You are a member of the operator’s scheme rather than the owner of your own one.

HMRC treats both as member directed schemes: PTM121000 names SIPPs and SSASs as examples of schemes where the member can direct how contributions are invested and decide what is bought, leased or sold.

Do the tax reliefs differ?

No. Both are registered pension schemes, so the same rules apply to each:

Contributions count towards the annual allowance, which GOV.UK gives as £60,000 for the current tax year, with the same carry forward and taper rules.
Income from investments held for the scheme is exempt from income tax under section 186 Finance Act 2004, and gains are exempt from capital gains tax under section 271 Taxation of Chargeable Gains Act 1992 (PTM121000).
Tax free cash is limited by the same lump sum allowance of £268,275 (PTM171000).
Company contributions to either scheme follow the same deduction rules, explained in when company pension contributions are deductible.

So the choice is never about getting more relief. It is about what you want the scheme to do with the money and who you want running it.

Worried about an HMRC check? Tax investigation insurance pays your accountant’s fees if HMRC opens an enquiry or compliance check. Solar Protect cover pays up to £100,000 with no excess. It never pays tax, interest or penalties.

From £108.75 a year (£9.06 a month) for individuals, £117.57 for sole traders and £207.50 for companies and partnerships, including IPT and the £20 admin fee.

See my price in 2 questions or call 01795 841 310.

★★★★★ Rated 4.9 out of 5 on Trustpilot from over 160 reviews

What can each one invest in?

PTM121000 says the tax rules do not restrict the types of asset a registered scheme can hold, but there are tax charges on certain investments. The most important are the taxable property charges on residential property and tangible moveable property (art, classic cars, wine and the like) held by an investment regulated pension scheme. A SIPP where the member can direct investments is caught, and so is an occupational scheme with fewer than 50 members where at least one member can direct, influence or advise on investments (PTM125100). In practice that means a typical SIPP and a typical SSAS face the same taxable property rules. Commercial property works in both, as covered in SIPPs and SSASs buying commercial property.

The differences are around your own company:

Shares in the employer. Under section 180(5) Finance Act 2004 a SSAS can buy shares in a sponsoring employer as long as, at the time of payment, their market value is less than 5% of the scheme’s net assets, and less than 20% across all sponsoring employers (PTM122000). Exceeding the limit brings an unauthorised payments charge on the employer and a scheme sanction charge.
Borrowing. Both types may borrow up to 50% of the net value of the fund immediately before the borrowing, and for money purchase arrangements the limit applies to each arrangement separately (PTM124000). Borrowing over the limit is a scheme chargeable payment with a 40% scheme sanction charge.
Operator acceptance. A SIPP operator can refuse assets it does not want to administer, such as unquoted shares, even where tax law would allow them. In a SSAS the trustees decide, within the scheme rules.

Can the pension lend money to my company?

This is the clearest dividing line. Section 175 Finance Act 2004 treats a loan to a sponsoring employer of an occupational scheme as an authorised payment if it passes the five tests in section 179 and Schedule 30: security by a first charge, at least the prescribed interest rate, a term of no more than five years, no more than 50% of the scheme’s net assets, and repayment in at least equal yearly instalments (PTM123200). The detail is in SSAS loans to the employer.

A SIPP has no sponsoring employer, so PTM123200 says a loan to an employer connected with the member attracts a tax charge on the member. Unauthorised payments are charged at 40%, with a further 15% surcharge above a set limit, and the scheme administrator can also face a scheme sanction charge of up to 40% (PTM024500). See the unauthorised payments charge.

A SSAS also has to consider pensions law, not just tax. The Pensions Regulator explains that most occupational schemes may not invest more than 5% of their assets in employer related investments and may not make employer related loans at all. A small scheme as defined in regulation 1(2) of the Occupational Pension Schemes (Investment) Regulations 2005 is exempt. Broadly, that means fewer than 12 members, all of whom are trustees (or directors of a corporate trustee), with either unanimous decision making or a registered independent trustee. If a SSAS does not meet that definition, lending to the company can breach pensions law even if the tax tests are passed, and TPR says trustees can be fined up to £5,000 (individuals) or £50,000 (corporate trustees).

Who does the administration, and what does that mean for cost?

In a SSAS the burden sits with you. The scheme administrator must register the scheme, pay certain tax charges, report events, make returns and give information to members (PTM151000). If more than one person is appointed, each is jointly and severally liable for the tax charges and penalties. Directors who take on the role are expected either to have a working knowledge of pensions tax law or to employ an adviser who does (PTM153000), which is why most SSASs appoint a professional practitioner alongside the member trustees.

In a SIPP the operator carries out the scheme administrator role, keeps the records and deals with HMRC. Your job is to make investment decisions within what the operator allows.

No regulator sets fees for either. A SSAS has fixed running costs (practitioner, bank account, trustee time) whatever the fund size, while SIPP charges vary from low cost platform products to fuller service SIPPs that accept property. Compare quotes against the investments you actually plan to make.

What does the choice look like in practice?

Illustration only. Two directors each have £300,000 of pension savings and their company needs £200,000 to fit out new premises.

With a SSAS holding £600,000, the trustees could lend up to £300,000 (50% of net assets) to the company, provided the loan meets all five tests and the scheme qualifies as a small scheme for the employer related investment rules. Interest paid goes back into the scheme tax free.
With two SIPPs, neither can lend to the company. Each could instead buy a share of a commercial property and let it to the company at a market rent, or the company could borrow commercially.

If the directors have no plans to lend or invest in their own business, the SSAS’s extra responsibilities buy them very little.

Which suits which director?

A SSAS tends to suit a small group of directors who want to pool funds, lend to the company or buy business premises together, and are prepared to act as trustees with professional support.
A SIPP tends to suit a director who wants wide investment choice, including commercial property, without running a trust or carrying scheme administrator liability.
Directors still deciding how to extract profit should look at the wider picture in pension contributions for business owners before choosing a vehicle.

What mistakes come up most often?

Using a SIPP to lend to, or guarantee borrowing of, the member’s own company. PTM123100 treats a guarantee as a loan of the amount guaranteed.
Assuming every SSAS is a small scheme for employer related investment purposes when a member is not a trustee or the rules do not require unanimous decisions.
Buying employer shares worth 5% or more of scheme assets.
Measuring the 50% borrowing limit on the scheme as a whole rather than on each money purchase arrangement.
Appointing a director as scheme administrator with no adviser, which HMRC can treat as failing the fit and proper test.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.