Doctors given guidance by NHS to help navigate taper allowance maze

3 September 2019

The NHS has issued fresh guidance to help higher-earning doctors to navigate the controversial taper allowance.


Problems have been brewing for higher-earning doctors since April 2016 when the taper allowance was introduced.

By reducing the amount of money higher earners are able to pay into their pensions and still get tax relief, the legislation means more higher-paid doctors are breaching their pension allowance and being stung with costly tax bills.

The British Medical Association claims this problem is impacting on patient care and has repeatedly warned that the threat of a substantial tax bill is encouraging effected doctors to either reduce their hours, quit the NHS or retire early.

As a result, earlier in the summer, the government announced a consultation on potential changes to the NHS pension scheme that could spare doctors a hefty tax bill.

The guidance, published today, is designed to help employers support affected staff during the current tax year ahead of any scheme changes.

Commenting on the guidance, Ian Browne, pensions expert at Quilter says: “It is clear from this guidance for NHS employees that the tapered annual allowance (TAA) has caused huge amount of complexity for front line staff. It addresses the maze of options confronting them to help mitigate any tax bill, but it should not have come to this.

“Pensions must be made easy to understand if we are to fill any of the savings gap, but this paper shows just how complicated it can get for someone who likely finds themselves unexpectedly stuck in a tax trap and unsure which way to turn. 

"Some of the measures being adopted by doctors could later be deemed by the taxman as an avoidance scheme. This could end up with even worse publicity for pensions if doctors are later challenged by the taxman."

 He adds: “It needs to be made a lot easier than this for public sector workers to navigate their pension savings, but constant Treasury tinkering has resulted in a tax system that is contradictory and is punishing those who least deserve it.”

Proposals put forward by the government and currently under consultation include allowing doctors to reduce their pension contributions and a review of the taper allowance.

Critics have, however, have suggested current proposals would only provide a sticking plaster to a more fundamental problem.

Mr Browne adds: “It is unknown how successful recent government proposals will be, but these are ultimately quick fixes. The best long-term solution is to scrap the taper, making pensions universally applicable and encourage saving, rather than the complete opposite.

"NHS staff are not the only ones impacted by the TAA and as such the government needs to have a more permanent solution proposed in order to prevent the wide spread staffing issues becoming systemic across the whole of the public sector.”


So much for "paying their fair share of tax..."

Or is this more evidence of either

1) Doctors are getting paid far too much or

2) The limits and restrictions on pensions are set too low


Senior doctor pensions

The NHS, and its patients, cannot be expected to lose out because senior consultants are being hit by massive tax surcharges causing them to have to retire early, or reduce their working hours. The NHS pension terms and 'taper relief' must be revised to exempt such senior doctors from any such penalties.
Such concessions would not, and should not, be extended to the likes of NHS managers, private dentists, bankers, accountants, lawyers,company directors, senior civil servants or anyone paid on a commission basis such as IFAs. Only senior consultants in the NHS are of such high value to society., and only they should be so protected from these excessive tax penalties.

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