GOVERNMENT U-TURN ON PENSION TAX FOR DOCTORS AND OTHERS?
In earlier newsletters we reported that hospital doctors and GPs were lobbying the government to amend the pension tax rules as the current system of restricting tax relief on pension contributions means many doctors paying almost all of the extra salary back in tax if they take on additional responsibilities or work additional shifts.
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. As mentioned in earlier newsletters we can assist you in computing the 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, to 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. But what about the private sector! Look out for possible changes to pension tax relief in the Autumn Budget.