What Is A SART?

What is a Self Administered Retirement Trust?
A Self Administered Retirement Trust (SART) is a variation of the conventional occupational pension fund except that your money is not pooled with other investors and you have full control over where you invest.  Although a SART is often referred to as a pension product, we use it as one of the most powerful tax planning tools available today.

Who can set up a SART?
It is suitable for proprietary directors (ie. those holding more than 6% of the shares in a company).  It is not suitable for sole traders or partners.  One of the reasons why we incorporate sole traderships or partnerships is to gain the advantages inherent in a SART.
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What are the advantages for the director?
There are seven key advantages from the individual’s point of view:

  • the transfer of money into the SART by the company is not subject to income tax.
  • the amount of funds which can be transferred is substantially higher than under a traditional scheme.
  • the individual is the sole beneficiary of the SART.  The key point here is that, if the company was to suffer a catastrophic failure, the money and investments already made to the SART will be protected from any creditor, receiver or liquidator.  This assumes that the funds were not invested in a SART for the primary purpose of frustrating an insolvency.
  • current year profits and retained earnings in the company can be transferred into the SART for the benefit of the individual.  In fact, it is possible to create a loss in a company using contributions to a SART and thereby reclaim Corporation Tax paid in the prior accounting period.
  • the Trust can invest in areas of personal interest to the director including property, private companies, equities, gilts, tracker bonds, deposits, investment funds, etc.
  • all investments grow free of Income Tax and Capital Gains Tax.  However, it should be noted that the SART cannot avoid the payment of Stamp Duty.
  • the individual can take advice from a variety of different sources and is not limited to accepting investments from one channel only.
  • benefits can be drawn directly from the SART at retirement commencing at age 50.


What are the advantages for the company?
There are six key advantages from the company’s point of view:

  • transfers to the SART are can be offset against the company’s profits, thereby reducing Corporation Tax liabilities.  In certain cases it is possible to eliminate taxable profits in the company by use of a SART.
  • transfers to the SART can be varied each year to suit the financial situation of the company.
  • the SART is confidential and separate from the staff benefits scheme.
  • SART’s are an ideal vehicle for the remuneration, motivation and retention of key employees who are not directors.
  • SART’s can be used as part of an efficient business exit plan for family owned companies by assuring the financial independence of the retiring generation.
  • The chosen pensioner trustee company carries out all the administration work involved in maintaining the SART.  We only partner with SART providers who charge a fee rather than commission as we feel this is in line with our own ethos of cost transparency.  Generally speaking, the costs of a SART are below those of a less flexible, traditional pension scheme.


What can the SART invest in?
The Trust can invest in a wide variety of assets such as:

  • Stocks, Shares, Gilts, Tracker Bonds
  • Shares in Private Companies
  • Residential Property – in Ireland or UK
  • Commercial Property – in Ireland or UK
  • Deposits
  • Investment Funds


The key investments which are not available through a SART include:

  • Self Dealing Investments - the trust cannot sell, or lease to, or buy from the company, the beneficiary or his/her immediate family.  All transactions must be done on an "arm's length" basis.  This exception also means that holiday homes cannot be brought through a SART.
  • Pride in Possession investments - fine wines, vintage cars, works of art, yachts etc are all prohibited investments.
  • Foreign property – except for property in the UK, a SART is not the ideal vehicle for this type of investment.  In addition, as you cannot “self-deal” you could not stay in the property in any case.


There are other issues involved in deciding whether a SART is the right product for you and we partner with leading providers of SART’s in the Irish marketplace.  Our involvement is to advise you as to whether a SART is suitable for your personal and corporate financial and tax situation and then hand-hold you through the set-up process.
            

Maximum Funding of SART – Illustrative Table

 

 

 

 

 

 

 

Age Next

Birthday

Funding as % of

Initial Salary

Age Next

Birthday

Funding as % of

Initial Salary

 

 

 

 

25

100.82

42

153.29

26

102.39

43

159.94

27

104.05

44

167.50

28

105.83

45

176.16

29

107.73

46

186.17

30

109.75

47

197.88

31

111.93

48

211.74

32

114.27

49

228.41

33

116.79

50

248.83

34

119.52

51

274.39

35

122.49

52

307.31

36

125.72

53

351.26

37

129.24

54

412.87

38

133.12

55

505.39

39

137.39

56

659.73

40

142.12

57

968.62

41

147.39

58

1,895.74







 
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