The £150 tax break for employer-arranged financial advice is being increased to £500, and the Government will consult on allowing under 55s to withdraw £500 from their pension pots to pay for financial advice.
An increase in the existing income tax and National Insurance relief for employer-arranged pension advice from £150 to £500 will make the provision of comprehensive financial advice a viable employee benefit without incurring a P11D liability.
The Budget documents also say the Government will consult on introducing a single clear definition of financial advice to remove regulatory uncertainty and ensure that firms can offer consumers the help they need.
The proposed ‘Pensions Advice Allowance’, trailed in the Financial Advice Market Review published earlier this week, will allow people before the age of 55 to withdraw up to £500 tax free from their defined contribution pension to redeem against the cost of financial advice. The Government says the exact age at which people can do this will be determined through consultation. The Government says it will also restructure the delivery of public financial guidance to make it more effective.
The Budget document says: “The government welcomes the recommendations of the Financial Advice Market Review (FAMR), which aims to support the provision of affordable and accessible advice for everyone, at all stages of their lives.”
David Gallagher, partner and head of Pensions at European law firm Fieldfisher, says: “The proposals to make clear what is financial advice, and to provide more scope for employers and pension scheme members to pay for it, are useful little changes. Getting financial advice is often the biggest barrier to pension scheme members accessing their own money, and its effect spreads because the older generation passes the message on to the younger – pensions are just too difficult.”