Particular benefits: pensions provision: pensions for pensions advice - conditions to be satisfied (from 6 April 2017)
Section 308C ITEPA 2003
Note this guidance has effect for pensions advice provided to an employee from 6 April 2017 onwards. For guidance on HMRC’s approach to this prior to 6 April 2017 see Employment Income Manual EIM21802.
From 6 April 2017, Section 308C ITEPA 2003 introduced a statutory exemption of £500 in a tax year for relevant pensions advice provided to employees. Under this exemption, if an employer provides pensions advice to its employees, or pays or reimburses the costs of pensions advice incurred by the employee, the cost of this advice is exempt from Income Tax up to £500 in a tax year provided either condition A or condition B is met.
The exemption applies to employees, former or prospective employees.
The exemption applies to the provision of information or advice in connection with the person’s pension arrangements or the use of the person’s pension funds. It can include advice on general financial and tax issues relating to pensions arrangements or pension funds allowing individuals to make informed decisions about saving for their retirement.
The exemption applies to the provision of information or advice on all of the employees’ pension arrangements and is not restricted to those pension arrangements offered by the employer.
The exemption applies to the first £500 of advice in a tax year, so if the amount exceeds that figure the first £500 in that tax year is tax free. Any amount over £500 w
ould be subject to income tax and National Insurance deductions in the normal way.
If an individual has more than one employment and each employer provides pension advice in the relevant tax year the exemption can apply to each employment.
Condition A - availability
The relevant pensions advice or reimbursement or payment is provided under a scheme that is open to:
- all of an employer’s employees generally
- generally to an employer’s employees at a particular location
A ‘scheme’ in this instance refers to the employer’s arrangements which allow its employees to access the relevant pension’s advice.
Condition B – age, ill-health
The relevant pensions advice or reimbursement or payment is provided under a scheme that is open to all of an employer’s employees, or all of the employees at a particular location where the employees:
- have reached the minimum qualifying age (with respect to the employer’s registered pension scheme)
- meet the ill-health condition
Employers can, therefore, provide advice to specific employees who are nearing retirement or are about to retire on ill-health grounds, as long as the advice is available to all employees in the same situation.
‘Minimum qualifying age’ means the employee’s relevant pension age, less 5 years.
Relevant pension age is usually the normal minimum protected pension age or their normal minimum pension age as defined by Section 279(1) of Finance Act 2004.
From 6 April 2010, the normal minimum pension age has been 55, although some pension scheme members may have protected rights to a different age (see Pensions Tax Manual PTM062210). For example if the employee’s normal minimum pension age is 55 the minimum qualifying age is 50.
The ‘ill-health condition’ is met by an employee if the employer is satisfied, on the basis of evidence provided by a registered medical practitioner, that the employee is (and will continue to be) incapable of carrying out their occupation because of their physical or mental impairment.