Since 1974 company directors have been able to establish occupational pension schemes, which give them control over their investment funds. Known as Small Self-Administered Schemes (SSAS) these schemes continue to be the most flexible pension arrangements for shareholding directors.

The company makes contributions on behalf of the members and contributions are treated as a trading expense, thereby attracting corporation tax relief. Unlike most pension arrangements there is no requirement to make regular contributions. This means the company may make contributions when profits and cash flow allow. Contributions up to £225,000 per member can be made which will qualify for tax relief subject to the wholly, exclusively and necessary test (the annual allowance for the 2008/09 tax year has been set at £235,000, rising by £10,000 each year to £255,000 in tax year 2010/11). Each individual is entitled to build up a pension fund with full tax privileges equal to their lifetime allowance (LTA).

For the majority of people, those not covered by transitional protection from the old regime, the standard LTA will apply. We know the projection for the increase in the LTA up to 2010, which is shown in the following table; after that date legislation proposes a review of the LTA every five years.

Tax Year Standard Lifetime Allowance

2007/08 £1.60 million
2008/09 £1.65 million
2009/10 £1.75 million
2010/11 £1.80 million

HMRC regulations enable a wide investment choice which can include: -

* Borrowings
* Collective investment schemes
* Commercial property
* Contracts for differences
* Deposit accounts
* Depository interests
* Futures and options
* Insurance company managed funds and unit linked funds
* Investment trusts
* Loans
* National savings and investments
* OEICS
* Stocks and shares
* Traded endowment policies
* Unit trusts

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