Dr Benjamin Holdsworth on the expected government announcements
Government ministers have ‘hinted’ that substantial tax reform will be announced in the Budget to alleviate punitive tax charges on doctors’ pensions.
The outcome of the government’s consultation into pension flexibilities last year and the review into the tapered annual allowance is expected to be published in the Budget on Wednesday 11 March. New tax relief rules, if actioned, would then be in place from the start of the next tax year in April.
A Treasury spokesperson said: “We want to make sure that doctors spend as much time as possible treating patients. That’s why we are urgently reviewing the pensions taper to ensure doctors aren’t turning down extra shifts for fear of high tax bills.
“We keep the tax system under constant review and make changes at budget, in the context of the wider public finances.”
In the Conservative manifesto published before the election in December, the government had made a pledge to review the tapered annual allowance within the ‘first 30 days’ of being in office. The harsh tax rules have been blamed for forcing doctors to reduce their hours or retire early.
The government’s own advisers have argued for widespread change to pension tax relief. The Office of Tax Simplification, the independent advisory body with sits under the Treasury, proposed last year that the annual allowance should apply only to defined contribution schemes and the lifetime allowance to defined benefit schemes such as the NHS pension.
Whatever the outcome of the Budget, many hope for a more simplified pensions tax system in the year ahead. In the meantime, doctors are reminded that the onus is on you as individuals to inform HMRC via your tax return if you breach the annual allowance. This is important even if you use Scheme Pays to pay any tax charge resulting from excess pension savings.
Dr Benjamin Holdsworth is director of Cavendish Medical – specialist financial planners for medical professionals in the NHS or private practice. For a second opinion on your finances, please contact us on 020 7636 7006. www.cavendishmedical.com
The content of this article is for information only and must not be considered as financial advice. Cavendish Medical always recommends that you seek independent financial advice before making any financial decisions.
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