Did you know you could claim salary sacrifice on up to £500 per annum spent on pension advice?
Launched in November 2017, the pension advice voucher scheme is a government initiative to encourage employees to seek good quality pension advice. The scheme is backed by HMRC and is similar to that of the child care voucher or cycle to work scheme. It would be deemed a non-taxable benefit in kind.
To make use of the tax saving you would need to sacrifice up to £500 of your pay in return for the pension advice voucher. The voucher can then be used on the purchase of pension advice; this can be used on your personal pension planning or related to your workplace scheme.
Your tax bracket will determine how much the pension advice voucher actually costs you, by saving on income tax and national insurance.
A £500 pension advice voucher could cost the following:
Basic rate tax payer: £340
Higher rate tax payer: £290
Higher earners caught in the tax trap between
£100,000 – £123,000 = £190
Additional rate tax payers: £265
The only provider of the voucher so far is VouchedFor. There has been a slow take up in the scheme. We believe this could be due to a lack of communication, the off putting administrative burden and lastly the potential concern for employer’s that their employee may seek bad advice.
However you are free to choose your financial adviser, this is not selected by the employer. Therefore you can use Finer Wealth and we are here to help.
Below we have broken down the actions required:
1)Employee agrees to sacrifice up to £500 of salary (which would have been taxed).
2)Pension advice vouchers confirm with the adviser that the employee has paid for pension advice, or is committed to.
3)Employer approves request and transfers funds via Pension Advice Vouchers (which is not taxable).
Employees pay less for pension advice via the tax saving.
Note: Finer Wealth is happy to use this voucher towards future adviser fees. Please get in touch with us if in receipt of a pension advice voucher.