NHS pensions and UK tax legislation - summary

The College notes that tackling the issue of pension taxation is one of many steps required to alleviate growing workforce pressures within the NHS. This page sets out a short summary of the pension tax legislation and signposts to further resources.

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 ran a consultation on giving doctors complete flexibility to scale down their pension contributions, which opened from 11 September to 1 November 2019. This replaced a consultation on extending the 50:50 offer to doctors that was briefly open in July 2019 before being prematurely closed.

You can read our response to the Academy of Medical Royal Colleges letter to the Treasurer on the impact of NHS pension taxation. This letter was referred to by Chief Executive of the NHS Simon Stevens in his letter to Matt Hancock MP, asking for written permission to reimburse NHS England clinicians who are issued with pension related tax bills. Letters between Mr Stevens and Mr Hancock are available online.

Mr Hancock confirmed that NHSE will reimburse clinicians in England in a statement published on 7 December 2019. NHS Wales has introduced the same interim pension arrangements in Wales. In November 2019 NHS Scotland introduced an interim policy that gives highly paid NHS staff the option to get their employer pension contributions paid to them as part of basic pay in the 2019/20 financial year.

Further information

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.

The BMA has also published ‘Working in the peri-retirement period: possible changes to working practices’. The document explores some of the key drivers for consultants leaving the workforce and sets out ways in which employers can support consultants to delay their retirement and retain them in the workforce. The document contains a fact sheet on the temporary suspension of certain NHS Pension Scheme regulations. 

NHS Employers has a webinar with more about the pension tax legislation and the solutions currently being explored.

The Academy of Medical Royal Colleges (AoMRC) has compiled a list of resources to explain the pension tax issue and to signpost to organisations that can give financial guidance. They encourage individuals to seek professional financial advice and are continuing to lobby on this issue, along with Colleges and the BMA. 

NHS Employers has compiled a list of organisations that are able to give expert guidance and advice on pension tax issues for members of the NHS Pension Scheme.