NHS Finance

19.11.19

NHS to pay tax bills of doctors to avoid winter crisis

The NHS in England will pay doctors’ tax bills this winter to avoid doctors losing extra working hours in fear that their tax bill will skyrocket if they earn over the £110,000 tax threshold.

Money from the pensions of medics is set to be used to pay the tax bills, with the amount used then repaid before the medic retires, in theory providing the government with decades to pay the money back.

The annual allowance taper, introduced in April 2016, lowers the amount of pensions tax relief people who earn over £110,000 get, reducing it from £40,000 to £10,000 over time.

The move from the government is partly down to lobbying from organisations such as the British Medical Association and the Royal College of Surgeons, who have both expressed displeasure with the annual allowance reduction.

In a blog post, Paul Youngs, BMA pensions committee chair, wrote: “For too long these perverse rules have meant that doctors are being forced to turn down vital extra shifts caring for patients in our under-pressure hospitals and GP surgeries because they would be literally paying to go to work. Doctors are trapped in a dilemma between wanting to care for patients and not wanting to end up financially worse off.”

The reduction in annual allowance is being described as a “tax trap” which punishes high-earners for working more hours.

A YouGov survey of surgeons commissioned by the Royal College of Surgeons of England in October of 2019 found that 69% of consultant surgeons have reduced the amount of time they have spent working in the NHS as a direct result of changes to pension taxation rules.

Earlier this year, the government proposed that certain benefit scheme members would be able to choose a personalised pension growth level at the start of each tax year. This would mean they could decide whether to top up their pension when they were clearer on their total earnings. The BMA described this as a “sticking plaster” – a short term solution that will not last.

The NHS will only pay doctors’ tax bills this financial year; it is believed that a more permanent solution will be in place in the next year.

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