SSAS Pension after 2027

Banking & Financial Pensions
1

Anyone yet have a clue or willing to speculate on how IHT in France will work for a UK SSAS (pension) held by a French resident after 2027, guessing it will end up on a UK probate form and therefore France will also (newly) be interested in taxing it, once the veil has been lifted!

In the UK it’s going to be newly taxed for IHT at 40% anything over £325k, apparently someone will distinguish between how much is going to the spouse (IHT free) and how much is earmarked for other beneficiaries, it is not a willed asset. I guess (I don’t know) that this will add to or create a seperate pot for the spouse, so that IHT isn’t avoided on the second death (as an interesting sideline, what if the spouse [also a French resident} has already taken her own pot using the 7.5% tax rate in France).

The other beneficiaries receive a right to possibly receive an income or lump sum at any date in the future deemed as income and taxed at their marginal rate. These beneficiaries may be direct decendants or not (but in any case not defined), so any order of heirs will not be known.

Looks like a real mess in the making!

2

No idea what a SSAS pension is but the France:UK tax treaty covers inheritance tax so there should be no double taxation, and any tax paid in the UK can often be credited against French tax (or vice versa)

3

I should really have used the name in full (apologies) but it’s long - a SSAS is a Small Self Administered (pension) Scheme with less than 12 members. The point about the tax is that the UK tax will be charged to the deceased, but it’s also outside the estate of the deceased (the pension is not in any will). France has a succession tax, it’s charged to the successor (I appreciate there is a double tax treaty which could apply), but the SSAS which is a trust does not have to distribute any funds to the successors and there is no time limit on that (or a couple of years down the line it could pay out to direct successors) - so France has no real basis on which to work out how much tax to charge. I don’t understand how it will work after 2027, (before then it escapes both UK and French IHT).

4

Quick question how was the SSAS set up? Was it associated with a family business? If so was the buaineas incorporated ie a company and the SSAS linked to that?

5

Yes there was/is a sponsoring Ltd company in the UK, A family company with my parents and two siblings (I am one of those) all directors of the Ltd co and trustees of the SSAS, my parents and other sibling are deceased. My spouse transferred into the scheme and one of my siblings is now a trustee and the “scheme administrator” as I no longer can be (because I’m not UK resident). The Ltd co still exists one nephew is a director, that’s now the only connection.

6

Does the SSAS have an administrator like an accountant or an actuary? They should know the answers to your questions.

7

My daughter is the scheme administrator (SA) effectively advised by me. I have run the SSAS 2004 - 2026 (but this is no longer possible as of April 2026). A SSAS does not require an accountant or actuary - I can get a professional SA involved, but they would like want to take over the scheme (something I don’t want and I doubt a UK SA would have the cross border knowhow). In 2027 I shall probably end up talking to someone like Blevins Frank (in the meantime I was asking if anyone had any knowledge).

8

In general people get rid of anything that could be construed as a Trust before coming to France since they are viewed negatively here. So may not get many responses from people in the same position.

Bkevins have a reputation for only advising those who sign up to their expensive services. Look at other professional international tax advisers like Anderlaine

9

Thank-you for the recommendation, they don’t really mention cross border expertise? But I will make an enquiry in 2027.

Luckily. SSAS pensions trusts (workplace pension trusts) are expressly excluded from the French reporting requirements for trusts.

Blevins are the last resort - they spend too much on promotion and we know who eventually pays for that

10

There was a reason for my question.

I think you should take professional advice in the UK regarding the SSAS anyway. The reasons being 2 : there have been recent moves that were being proposed to tighten up on SSAS’s. I don’t know what’s been implemented but a specialist adviser for SSAS’s will know how far that’s got and what is coming.

Then as a secondary question, what (if anything) is the impact of taxation of pensions changes from 6th April 2027 so far as the SSAS is concerned and how best to plan going forward.

Gut feeling if you’ve got an SSAS set up keep it , possibly down the generations, as it will be a lot harder if not impossible to set up for many smaller or family firms in the future and they are jolly useful constructions.

The reason for my question is, while I am not an SSAS expert and without looking up some links I kept on SSAS’s, I had the impression that an SSAS was structured a bit like a private DB scheme. In that the scheme has a life of its own (even if at some stage money in it could become much reduced) but beneficiaries do not own the assets. As such they would only be taxed on money they receive from the scheme (assuming this is not structured as a loan etc but actual income). Your Ltd company and the structure seems to fit what I expected.

So on that basis unless there’s something specific in the 6th April 2027 changes that brings in SSAS’s, and I doubt this, then just like a large company’s DB scheme I can’t see how the 6th April 2027 changes make you taxable in the UK on anything other than money you receive from the scheme, just like a DB.

And the same in France - report income received from the SSAS like any other income.

Yes I agree with JJones that France “looks through” trusts and treats them as though not there, but I’m pretty sure a pension scheme, although technically similar, is different and that pension specific legislation will apply similar to a DB. Especially as you’ve said you do not control the scheme (important from France’s view I suspect :slight_smile: ). If you did control the scheme in any way I suspect that is when France might take a different tax view, I would avoid this and I am sure the UK residents who do control the scheme won’t be directed by you…

If you need me to dredge up the links I know I saved on SSAS’s, and I think a specialist firm or two might be mentioned in them, then please ask me but after Easter Monday as I have a couple of deadlines before then.

1 Like
11

Thank-you for your detailed response.

I do try very hard to keep abreast of changes in SSAS legislation, from the UK side I am already aware that I can likely avoid UK IHT by restructuring the pooled assets and changing the situs of these assets, that doesn’t mean I necessarily want to do that.

A SSAS pension was outside the estate in the UK for inheritance tax purposes and from Apr 2027 it will form part of a UK estate (it’s a DC scheme), the presumption is that it now also falls into an estate for IHT purposes in France.

Where I am struggling is gaining any inkling at all on how France will assess for IHT.

As you know the trustees have total discretion over the distribution of the pension, the pension does not “belong” but is just “earmarked” for the member and the pension can’t be passed by a will to any beneficiary. This totally conflicts with France’s IHT regime based on succession and as you rightly point out any beneficiaries will not come into ownership of the assets, but rather simply have a right to possibly receive income.