PART 2: TAX
PENSIONS ADVICE With effect from 6th April 2017 a new exemption from tax and reporting was introduced. This exempts costs of up to £500 incurred by the employer in providing pensions advice to an employee. This replaced the previous threshold of £150 introduced on 14th December 2004 which suffered from a restriction regarding general financial advice for the employee and was a threshold and not an exemption. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESSIONALS Since Financial Conduct Authority (FCA) rules require financial advisers to compile a whole of life financial summary and ensure pensions guidance does not conflict with the employee’s general financial situation the original exemption was very rarely used by employers. The new exemption is more flexible in that as long as the two conditions are met, one, that it is available to all employees generally and two, circumstances relating to age and ill-health, the first £500 of costs incurred in the provision is exempt. The new exemption will also apply as long as additional financial advice is limited to that required to satisfy FCA rules. PROFESSIONAL FEES AND SUBSCRIPTIONS Professional Fees and Subscriptions paid to a Professional Body or Learned Society are exempt from tax provided the membership is necessary or required for the job and the Society or Body is approved by HMRC. A full list of approved societies (List 3) is available on the HMRC website at https://www.gov.uk/government/publications/professional-bodies-approved-for-tax-relief-list-3, and is updated from time to time. RELOCATION Relocation packages are usually made available to assist employees in moving home under one of three circumstances to: • take up new employment with a new employer • take up new employment with a current employer • continue current employment at a new location. No printing, copying or reproduction permitted. In general terms where relocation is required for job purposes, the first £8,000 of qualifying expenditure in any package is tax-exempt subject to certain conditions: • the existing home is not within reasonable daily travelling distance of the new workplace • the new home is within reasonable daily travelling distance of the new workplace. In practice the assistance is provided in order to allow the employee to move closer to the normal place of work, however it is possible for the employee to move further away from the normal place of work and still qualify for tax-exempt assistance. To qualify the arrangement has to satisfy the two conditions above. To qualify for tax exemption the expenses must, with limited exceptions, be incurred (or benefits received) before the end of the tax year following the tax year in which the new job commenced,
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