Government U-turn on pension tax for doctors and others?
Post Author:
Rona Burns
Date Posted:
October 16, 2019
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In our blog of 12 June 2019, we reported that hospital doctors and GPs were lobbying the government to amend the pension tax rules. This is because the current system of restricting tax relief on pension contributions means many doctors, who take on additional responsibilities or work additional shifts, paying almost all their extra salary back in tax.
This issue does not just affect doctors. From 2016/17 those taxpayers with ‘adjusted income’ over £150,000 and ‘threshold income’ over £110,000 receive a tapered annual allowance. This taper potentially reduces the normal annual pension allowance from £40,000 down to a minimum of £10,000, which may result in tax payable on excess contributions. We can assist you to calculate any potential liability.
The Government have recently announced that it would consult on allowing senior NHS staff to select their level of pension accrual at the start of the year. This will give them more pension capacity to take on additional work without breaching their annual allowance.
The Treasury has also agreed to reconsider the “taper”, which restricts pension tax relief, not just for NHS workers but across the public sector. We therefore think that there may well be changes to pension tax relief announced in the Autumn Budget for workers in the public sector. So far, unfortunately, we are not aware of any potential changes for affected workers in the private sector. We will of course keep up you updated regarding this issue in future blogs, as and when more information becomes available.
