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Government urged to raise £150 tax-free advice limit

The Government should scrap the £150 tax-free limit on independent financial advice paid for by employers, the Association of Consulting Actuaries says.

In its submission to Lord John McFall’s Workplace Retirement Income Commission, the ACA urges policymakers to improve financial education to create a “culture of saving” in the UK.

ACA chairman Stuart Southall (pictured) says this could be achieved by increasing financial education in schools and improving financial incentives for employers considering using an IFA.

He says: “We believe it is essential to increase financial education, beginning in schools and ultimately spreading throughout the entire population.

“Employers should also be encouraged to provide education to their employees on financial matters and indeed might be incentivised to provide them with access to independent financial advice by abolishing the £150 tax-free limit on independent financial advice paid for by the employer.”

An ACA spokesman says the limit should replaced with something “much higher”, although a specific figure has yet to be determined.

He says: “£150 is not enough to get any sufficient level of financial advice.”

The organisation is also pushing policymakers to offer a tax incentive for private pension schemes which meet a specific “quality standard” over and above the 8 per cent minimum combined employer/employee contributions which will eventually apply to Nest.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. OK…. so what do they actually mean. Abolish the tax gree allowance for employers paying for advice or abolish the allowance?
    Is it just me who thinks this can be read two different ways?

  2. Simon Webster 3rd May 2011 at 1:12 pm

    It pains me to admit that I did not know about this. We usually just invoice for GPP admin or similar which is allowable. Is this a per employee annual allowance?

  3. Hi Simon,

    It’s per employee – ACA just clarified that they want the £150 limit removed and replaced with a larger figure, although nothing specific put forward yet.

    Hope this helps.

    Tom

  4. Simon,

    the original regulations can be found here:

    http://www.legislation.gov.uk/uksi/2004/3087/made/data.pdf

    They cover advice and INFORMATION up to £150 per employee per year. So an adviser could send one of their unregulated staff along to an employer to give information to employees and charge for that. Advice may well cost more than £150 but you could certainly provide information within the current limit.

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