Current rules governing NHS Pension Schemes can see some of the NHS’s top earners incur pension related tax charges.
The tapered annual allowance that’s currently in place was first introduced in 2016 and in simplified terms means that for every £2 of income above £150,000 per annum, £1 of annual allowance will be lost, compromising a worker’s overall annual allowance.
This means some senior clinicians, consultants and GPs face heavy tax charges as they are breaching their annual allowance.
HM Treasury is currently reviewing the link between the tapered annual allowance and the impact on public services of these workers consequently cutting their sessions to restrict these charges.
The government has proposed changes that would allow top earners to set their own level of pension accruals on a percentage basis, with the option to recycle unused contributions back into their salary.
The Department of Health and Social Care (DHSC) are due to open a public consultation on this and a number of proposed changes
Whether these changes will also impact other defined benefit pension schemes remains to be seen.
If you would like any advice on annual allowances, utilisation of unused annual allowances for earlier years, how to calculate your tapered allowance or any other tax related issues, please do not hesitate to get in touch.
Our expert tax team are on hand to help you plan a tailored and tax-efficient plan, guiding you through the allowances available to you, and how to claim them.