Tax exemption on employer provided pension advice

27 March 2017

Pensions information and advice provided by an employer to employees generally is unlikely to give rise to an employee benefit tax charge and using an HMRC provided example this would include a presentation to which all employees are invited to attend.

However, where an employer pays fees to an external provider for one-to-one sessions to provide advice to employees, as a general principle, a tax charge will arise on the cost of the advice as this represents an employment-related benefit.

With effect from 6 April 2017 a new Income Tax exemption will be available to cover the first £500 worth of relevant pensions advice provided to an employee.

The published update explains HM Revenue and Customs (HMRC’s) approach to pensions advice up to 5 April 2016 i.e. Employment Income Manual EIM21802 and for tax years 2017 onwards Employment Income Manual EIM21803.

The Employment Income Manual will be updated once the Finance Bill 2017 receives Royal Assent.

If you have any comments, or queries, on this draft guidance please contact the Employment Income Policy team.