The £500 pensions advice exemption for employers
An employer can pay up to £500 a tax year per employee for information or advice about the employee's pensions without it being taxed as a benefit, under section 308C of the Income Tax (Earnings and Pensions) Act 2003. The scheme must be open to employees generally, or to all employees at a location. Information and guidance qualify as well as regulated advice, and the exemption still applies when the employee pays through salary sacrifice.
Figures checked 27 October 2026.
What the exemption covers
- Information or advice in connection with the employee's pension arrangements
- Information or advice on the use of their pension funds
- General financial and tax issues relating to pensions, according to HMRC
- Every pension the employee holds, including those with past employers
- Advice the employer provides, or pays or reimburses the cost of
Who it must be open to
The scheme has to meet one of two conditions. Condition A: it is open to the employer's employees generally, or generally to the employees at a particular location. Condition B: it is open generally to employees who have reached the minimum qualifying age or who meet the ill-health condition.
The limit is the first £500 of advice in each tax year, for each employment. If the cost goes over £500, the excess is taxable.
Through salary sacrifice
| Employee | Salary given up | Income tax saved | Employee National Insurance saved | Cost in take-home pay | Employer National Insurance saved |
|---|---|---|---|---|---|
| Basic-rate taxpayer | £300 | £60 (20%) | £24 (8%) | £216 | £45 (15%) |
| Higher-rate taxpayer | £300 | £120 (40%) | £6 (2%) | £174 | £45 (15%) |
2026 to 2027 rates for England, Wales and Northern Ireland, on a £300 pensions session. Scottish income tax rates differ.
Buzz services that involve pensions
Buzz coaching sessions and the Financial Plan cover pensions alongside budgets, savings, debts and property. Whether all or part of a fee falls within the exemption depends on how much of it is information or advice about pensions. Buzz Accounting can work this out against your payroll before you launch a scheme.
The pension advice allowance
A separate rule lets a person with a defined contribution pension take up to £500 from the pension, tax-free, to pay for regulated retirement advice. It can be used three times, no more than once a tax year, and only for regulated advice. It is paid from the pension pot. The employer exemption is paid by the employer, and the two can be used together.
People aged 50 or over with a defined contribution pension can also book free guidance from Pension Wise.
Common questions
Does it have to be regulated financial advice?
No. Section 308C covers "information, or advice" in connection with pension arrangements. HMRC's manual does not require the adviser to be regulated.
Is the £500 per employee or per company?
Per employee per tax year, for each employment. Someone with two jobs can have £500 from each employer.
Do we report it on a P11D?
Not within the £500, and HMRC lists employer-provided pensions advice among the benefits that do not need to be valued under salary sacrifice. Anything above £500 in the tax year is taxable.
Can we offer it only to senior staff?
No. The scheme must be open to employees generally, to all employees at a location, or to all employees who have reached the minimum qualifying age or meet the ill-health condition.
Sources
- HMRC Employment Income Manual EIM21803: pensions advice
- Income Tax (Earnings and Pensions) Act 2003, section 308C
- Income Tax (Earnings and Pensions) Act 2003, section 228A
- GOV.UK: salary sacrifice and the effects on PAYE
- GOV.UK: rates and thresholds for employers 2026 to 2027
- CIPP: tax-free pension advice allowance
- MoneyHelper: Pension Wise
Related guides
Guides for employers
- Financial wellbeing cost per employee in the UK
- Employee financial wellbeing for small businesses
- Financial coaching for employees
- Is employer-paid financial coaching a taxable benefit?
- What the 2029 salary sacrifice cap costs employers
- Employee financial wellbeing survey questions
- Automatic enrolment duties for small employers
- Earned wage access and salary advances for employees
- Supporting employees through life changes
- How to set up a financial wellbeing programme
- Financial wellbeing policy template
- Financial wellbeing providers' prices compared
- Salary sacrifice calculator
- Benefit or pay rise calculator