Independent Financial Advisers may pick up new business after the chancellor this week revealed advisers will be able to provide employees with tax-free advice worth up to £150 per year.
In his eight Budget since Labour came to power in 1997, Gordon Brown has decided to remove the benefit in kind charge, which currently forces employer to pay tax each time they offer pensions advice to their workforce.
The change, which will allow employers to offer each and all of their employees tax free advice of up to £150 per annum, is part of the government's strategy to encourage more people to save for their retirement.
Almost hidden away in the Budget document, the new legislation reads: "To support employers who help their employees through these decisions, the Government will exempt pensions information and advice from being a taxable benefit, subject to it being generally available to all employees and below a limit of £150 for each employee per year.
Mark Stopard, pensions specialist at Momentum Financial Services, believes the tax removal could help diminish the UK's current pension crisis.
"This removes a significant disincentive for pensions advice in the workplace which is one of the most effective ways of increasing pension provision and starting to tackle the £27bn annual savings gap," says Stopard.
Somewhat agreeing with that, Stewart Ritchie, pensions development director at Scottish Equitable, says the law change is "better than nothing", but adds he believes it won't make a big impact on people's savings behaviour as the main flaws in the system - the Pension Credit and the complexity of pensions - still have not changed.IFAonline
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