New tax regulations are being introduced to encourage employers to increase the take-up of pension schemes within their workforces.
Under exemption regulations announced in this year's Budget, employers will for the first time be able to provide employees with access to pensions advice without paying a tax fee.
This will apply to cases where the benefit is generally available to all employees and below a limit of £150 for each employee yearly.
If higher than £150, a tax charge will apply to the entire amount, while further advice on investment, and tax or on leisure and legal matters will not be covered.
Where an employer pays outside consultancy fees for seminars or for one-to-one sessions on financial advice for employees, a tax charge is likely to arise on that cost.
For advice offered to the employee; no tax arises on employees for general advice a consultant provides to employer about its pension scheme.
For employees footing the bill themselves, no tax relief is recieved for those costs.
Paymaster General, Dawn Primarolo said: “The regulations laid will ensure employers can provide access to this information and advice without a tax charge arising and so encourage employers to provide this valuable support to their staff."
Pensions minister, Malcolm Wicks said that employers should provide their staff with access to a ‘decent standard of pension information and advice’.
“New powers, to be introduced in the Pensions Bill, will go further and require those companies with low levels of employer contribution and pension take-up to ensure information and advice is available.”
The regulations also reach existing exemptions for canteen and recreational facilities to cover employees working at the premises of another employer and will come into power on 14 December.IFAonline
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