Aifa is calling on the Government to remove a tax anomaly which reduces the attractiveness to employers of providing pension advice to their employees.
Director general Chris Cummings says that he raised the issue in a meeting with pensions minister Mike O’Brien last week and O’Brien has said that he will look into the matter.
Currently, when an employer pays an external company fees to provide face-to-face advice to its employees, the cost of the advice is taxed as an employee benefit.
But legislation which was enacted in 2004 exempted advice from tax as long as it is offered to all employees, only covers pensions and costs no more than £150 per employee a year.
If the cost of the advice exceeds £150 per person, the whole amount is taxable and not just the excess.
Cummings said: “This is a tax anomaly that the Government should look at. In our meeting, Mike O’Brien said that he would go away and look into it.”
Informed Choice joint managing director Martin Bamford says: “This figure of £150 is quite low and is a bit of an anomaly.
“For a Government that is trying to encourage greater pension savings which does require advice, it is a shame that this tax exists.”