Let’s set the scene. You’re a business owner in your late fifties. The end is – well, not ‘nigh’, but visible! You can picture the version of you that finally stops setting a 6am alarm, and you’d quite like to know two things: how much you should be ploughing into your pension between now and then, and roughly how much you’ll have to live on once you ‘down tools’. So, you book some proper advice. Then the bill arrives, and a small voice asks, ‘could the company have paid for this?’
The answer, often, is ‘yes’ and HMRC will wave it through without so much as a raised eyebrow. Pensions advice is one of a tiny handful of benefits that escape the benefit-in-kind net entirely. No income tax, no national insurance for the employee or the employer, and full corporation tax relief for the employer.
How it works
An employer can pay up to £500 per person, per tax year for pensions advice for employees and directors, and it’s exempt from income tax and NI. And if you’re looking at providing this benefit for your staff, you can do so through a salary sacrifice arrangement.
The conditions you have to meet
You need to satisfy one of two conditions.
Condition A – offer it to everyone.
If the benefit is open to all staff, you’re ‘in’. The catch is obvious: if you’ve a workforce of forty, offering £500 of advice to all of them could get expensive (though the salary sacrifice route above takes much of the sting out). A handy tip is that you’re allowed to restrict the offer by location. So, if you run two sites, you can offer it to everyone at one of the sites and don’t have to offer it to staff at the other.
Condition B – offer it on grounds of age or ill health.
This is the one most owner-managers will reach for. The exemption applies if, for example, you offer the advice to employees who are within five years of being able to take their pension which, with the normal minimum pension age currently 55 (and rising to 57 from April 2028), means broadly age 50 and up – or to those in ill health.
And here’s the elegant part: you only have to offer it to everyone who qualifies. It doesn’t matter how many actually take you up on it. So, if you’re the fifty-something director and your team is largely in their twenties and thirties, you can offer the perk to everyone who meets the age test, find that you’re the only taker, and the exemption still stands perfectly intact.
Don’t leave £350 on the table
The £500 cap resets every tax year, so think about the timing of the advice you pay for.
Picture Andy, who works at ABC Ltd and starts receiving qualifying advice in February 2026 – late in the 2025/26 tax year. The advice is ongoing, and by May 2026 (now in tax year 2026/27) the total bill has reached £850. If ABC Ltd waits and pays one £850 invoice, only £500 is exempt and the remaining £350 becomes taxable. But if Andy’s adviser bills once the work hits £500 or by 5th April, whichever comes first, the cost is split across two tax years and the whole £850 sails through tax-free for both Andy and ABC Ltd. It’s the same advice, the same money, but two invoices instead of one. £350 of tax-free benefit, rescued by a calendar!
“But surely it only covers drawing the pension?”
This is the most common misconception, and it’s worth dispelling because it makes the perk far more useful than people assume. The exemption is not limited to advice about taking your pension. It stretches to general financial and tax issues relating to your pension arrangements – including how much to pay in each tax year and what that does to your tax bill; exactly the two questions our retiring business owner started with.
And the company gets a corporation tax deduction too
Let’s not forget the company side of things. As well as being free of NI for the employer, the cost of providing pensions advice to staff is an allowable expense for the company, so it reduces the corporation tax bill in the usual way, just like any other genuine staff cost. A benefit that’s tax-free in the employee’s hands and deductible in the company’s – you don’t see that combination often.
The bigger picture
It’s easy to file this under ‘minor tax tip’ and move on. But step back and it’s something more interesting: a way to put proper, professional retirement planning in front of the people who run and power your business (yourself very much included) without anyone picking up a tax charge for the privilege.
Knowing how much to contribute, understanding what your pots will actually deliver, and seeing how it all connects to the age your money is funded to; that’s not paperwork, it’s the difference between guessing at your future and designing it. The £500 exemption simply makes the first conversation free.
