In the 2016-17 tax year a tapered annual allowance on pension savings came into effect across the UK. This change affects high earners above £110,000 across the UK and non-pensionable work counts in the annual allowance calculation, such as extra programmed activities.
This change to tax legislation, coupled with pre-existing rules around lifetime annual allowance, has resulted in some high-earning doctors being issued with large and unexpected tax bills.
The RCPCH recognises members’ concerns around this issue, which has created a perverse incentive for senior clinicians to reduce their working hours or retire early.
The Government has pledged a consultation on giving doctors complete flexibility to scale down their pension contributions, which opened on 11 September and will close on 1 November. This replaces a consultation on extending the 50:50 offer to doctors that was briefly open in July 2019 before being prematurely closed.
The British Medical Association (BMA) has launched a Pensions Modeller for its members. Regular updates on the BMA’s work to lobby the Government on this issue are also on their website, along with factsheets and an invitation to write to your local MP about the pension tax legislation.