Government claws back thousands from GP widows
By Steve Nowottny
Exclusive: The Government is using a tax loophole to claw back thousands of pounds paid out following last year's High Court victory over the capping of GP pensions, Pulse can reveal.
Widows and widowers of GPs due to benefit from the judgment have been told they must pay 40% income tax on their lump sum payment – even though the payment was intended to be tax-free, and surviving GPs will not be taxed.
Recently-retired GPs received an increase of up to 15% in their pension, plus a lump sum payment, following the High Court's ruling last year that former health secretary Patricia Hewitt had imposed an pensions cap unlawfully.
But Her Majesty's Revenue and Customs has ruled any lump sum payment made to the surviving spouse of a deceased GP more than two years after their death must be taxed.
Jean-Ann Bartlett, the widow of King's Lynn GP Dr David Bartlett, said it was ‘absolutely ridiculous' that she should have to pay 40% tax on a lump sum of more than £25,000.
‘Why should I suffer because of the unlawful action of the Secretary of State?' she said.
‘My husband worked for the NHS for 35 years. I used to be on duty when he was on duty, as a GP's wife had to be. It is so unfair to these deceased doctors - and of course they are not here to fight for what is rightfully theirs.'
A spokesperson for the BMA said it was challenging the ruling: ‘Our understanding is that under HMRC rules, these payments should not be taxable.'
‘The issue has been raised with us by a small number of members and we have notified the Department of Health, requesting it makes clear to HMRC that these payments should not be taxed. As yet, we're still awaiting a response.'
A Department of Health spokesperson said: 'The DH must abide by the tax rules set out in the Finance Act 2004. The Act requires that payments deemed to be "unauthorised payments" are subject to a 40% charge. The Act designates arrears of death gratuity payments to be authorised if they are paid within 2 years of the date the scheme could reasonably have known about the members death. Payments which do not meet this criteria are designated as "unauthorised payments" and are subject to the 40% charge.'
She said the precise number of widows/ers who will be affected was unknown but that it did not anticipate a large number.