New changes are being introduced to the annual allowance pension tax charges for NHS GPs.
From 2019/20, clinicians who have reached their annual pension allowance and are subsequently notified of a tax liability, will be able to choose ‘Scheme Pays’ on their pension form, meaning that they don’t have to worry about paying the tax charge themselves.
The NHS will make a commitment to pay a corresponding amount on retirement, ensuring that they are fully compensated for the effect of the ‘Scheme Pays’ deduction. So, if GPs exceed the annual allowance for 2019/20, there should not be any financial impact to them individually.
Don’t Miss The Deadline
If you are affected by this change, you need to note:
- You must make the ‘Scheme Pay’ election by 31 July 2021 to be in time for 2019/20.
- If you have left the NHS Pension Scheme because of the potential tax charges and growth in your contributions, you can rejoin as taxes are going to be covered, but do not forget you get tax relief on your contribution each year.
In a proposal for 20/21, an individual will be able to choose the amount of their income they would like to make pensionable. A final decision is still to be announced.
Still Have Questions?
The NHS has put together a list of helpful questions and answers that you could find useful. These can be found at https://www.england.nhs.uk/pensions/faqs-for-staff/.
Bracey’s Director Nipun Gupta, who is a specialist in the medical sector, said:
“Your practice may already be aware of the new changes in relation to the annual allowance pension tax charges, but we just wanted to highlight the change to all of our GP clients.
“It can appear quite complicated, but with our help it will be a lot easier to understand.”
Get in touch to arrange an appointment.