Temporary fix to cover doctors’ pension tax bills
Ministers have reportedly signed off a temporary plan to cover the pension tax bills of medical professionals in England, according to various media reports.
The interim measure aims to tempt doctors and consultants back into accepting overtime shifts ahead of a potential winter crisis.
Some senior physicians have refused to take on these shifts amid fears of being clobbered with unexpectedly high tax bills.
That sparked a tax row after some high earners saw their £40,000 tax-free annual pensions allowance eroded to £10,000 by a complex taper.
The tapered annual allowance applies to people with a taxable adjusted income of more than £150,000 and a threshold income over £110,000.
For every £2 of income an individual has over £150,000, their annual allowance is reduced by £1, down to a minimum of £10,000.
In August, the Treasury announced a review of the tapered annual allowance.
Until a permanent fix is found, tax bills incurred by senior physicians look set to be covered under the scheme pays process offered by the NHS pension scheme.
The proposal will mean those affected can dip into their pension pots to pay tax bills they get for 2019/20, with the government topping that up before those individuals retire.
Talk to us about the tapered annual allowance.