Can you pay adviser fees from your pension or ISA?

01From a pension

HMRC treats a pension scheme paying your adviser as an authorised payment, with no income tax on you, when (PTM143200):

• the arrangement between you and the adviser is genuinely commercial;
• the amount is appropriate for the service provided; and
• the advice relates to that pension scheme, for example fund choice, provider, pension tax, or how to take an income from it.

Advice on your ISA or other investments, rather than on the scheme, cannot be paid from it this way. A payment that is not for the scheme, or that is more than a commercial amount, is an unauthorised payment, which carries tax charges.

02The tax effect, illustrated

An illustration of a £1,000 fee, ignoring investment growth and assuming a quarter of any later withdrawal would be tax-free and the rest taxed as income:

The pension figures are what the £1,000 would have been worth if you had withdrawn it later instead. Real outcomes depend on your tax position, the lump sum rules that apply to you, and growth on the money. From 6 April 2027, most unused pension funds will also count towards your estate for inheritance tax (HMRC), which changes the comparison for some people. This is arithmetic, not tax advice.

03The pension advice allowance

Since 6 April 2017, a defined contribution or hybrid pension scheme may pay up to £500 towards advice for you, tax-free (PTM142000):

• no more than once in a tax year, and no more than three times in total, across all your pensions;
• paid directly to an FCA-authorised adviser;
• for advice on your pension and wider financial position in retirement, or putting it in place.

Schemes are allowed to offer it but not required to, so ask your provider whether it does.

04From an ISA

Some ISA providers can pay an adviser's fee from the cash in your ISA. HMRC's guidance for ISA managers says money withdrawn to cover fees and charges cannot be replaced without counting towards your annual subscription limit. Over years, fees paid from an ISA steadily shrink the amount sheltered from tax. Paying from a bank account or a general investment account keeps the ISA intact; ask your provider which options it offers.

05What to watch with fees paid from investments

A fee taken from your investments, called a facilitated adviser charge, is easy to stop noticing. Check your annual costs and charges statement to see what was paid in pounds. If you cancel an ongoing service, also tell the provider to stop paying the adviser: see paying for ongoing advice without a review.

06Common questions