I've heard that you can take £500 out of a personal pension tax free to pay for financial advice. How does this work?

I've heard that you can take £500 out of a personal pension tax free to pay for financial advice. If so, is there an age limit on this? Does the money have to be used to pay registered financial adviser or can it also be used to seek financial guidance from a money coach?

Hi Nicholas,

On the £500 point I am unsure if maybe this is getting confused with the £500 Employer-Arranged Pensions Advice Exemption. This is where an employer can pay for £500 worth of pensions advice for employees with out it being taxed as a benefit.

When it comes to financial advice fees for pensions we are allowed to take our fees from the pension and there is no tax to pay. You only have to be above 18 for this. You do not withdraw this and pay it to us. It is paid directly to us by the provider. As such the provider has to agree to this and not all of them allow for financial adviser fees.

However, it has to be advice related to the pension. If for example you are getting advice on your ISA then we can't just take the fee for this work from your pension. HMRC does not take kindly on that sort of thing.

When it comes to a money coach I would recommend looking for one and then asking them how they can take the fee. I would be surprised if this can be taken from the pension unless they are giving you advice on the pension.

Thanks
Luke James

Independent Financial Adviser