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SSAS - Pension Scheme

Mattioli Woods had already been working with Clive, a serial entrepreneur, for many years when he asked for advice in relation to how an exciting new business venture in private jet chartering could be financed, essentially as a start-up.

Clive had a long-established small self-administered scheme (SSAS) which housed the business property for one of his other businesses, Global Beach. The scheme carried surplus cash of which Clive was seeking to use an element to help establish the new business venture, Victor. Whilst it was possible for Clive’s SSAS to lend monies to the new business under the loanback facility, HM Revenue & Customs’ requirement for such loans to be repaid within five years and on an annual capital and interest repayment basis, coupled with the need for security, made such a facility unsuitable for a start-up where cash flow was essential in the earlier years. Accordingly, a suggestion was made that it was possible to use an element of the scheme’s surplus cash to provide equity finance to the new business in the form of a share purchase. Due to an anomaly in the governing HMRC rules, the SSAS was unfortunately heavily restricted in its ability to purchase shares in a new and connected company. The alternative was to then consider the use of a self-invested personal pension (SIPP) where no such restrictions apply. However, under our advice Clive wished to retain the inherent control and flexibility associated with his SSAS in most other areas.

A solution was to transfer only an element of the surplus cash within the SSAS to a new SIPP. A further complication was that as Clive had already drawn his tax-free cash it was not possible to undertake a partial transfer of his funds to a new SIPP. To overcome this, the solution was to transfer an element of Clive’s wife, Beverley’s, share of the SSAS to the new SIPP as she had not drawn any pension benefits.

As a result of creative thinking and appropriate advice, the start-up business was created and has since gone from strength-to-strength following Clive’s instincts that a real gap in the private jet charter market existed.

In addition, and after ensuring there would be no taxable property issues involved in the share purchase, the pension fund now carries a promising investment with strong growth prospects. Although any business venture like this carries risks, it forms part of Clive’s and Beverley’s overall wealth and deemed to be in proportion and sensible, notwithstanding the fact that the pension route represented a highly tax efficient method of financing such a business venture, certainly in comparison to financing through personal and taxed monies.

Victor, the world’s first quote comparison, book and buy service for private jet travel, has now launched successfully. Victor members charter private jets online and can reduce their cost by selling spare seats to other members, buy a seat on another member’s aircraft, or just group together to fly for a fraction of the cost of a whole charter. Victor offers its members Europe’s largest contracted fleet with more than 180 aircraft available to book from 42 operators -