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Doctors paying extra £18,500 in pensions tax, claims BMA Scotland

Scottish doctors are faced with an additional £18,500 bill as a result of the changes to pensions tax rules, a new BMA survey has claimed. 

BMA Scotland is running a survey of its members and has found that two-thirds of respondents had either received a substantial tax bill on their pensions or were expecting to receive one. 

It claimed that, among those who provided figures, the average tax paid on pensions was £18,500.

The BMA said these unexpected pension tax bills are 'punitive' and risk jeopardising vital NHS services. 

The interim findings, which include responses from 354 consultants, GP, staff and associate specialists, also showed that GPs were forced to reduce or are planning to reduce their hours to avoid being caught in the pension trap. 

The BMA previously warned GPs are retiring early or cutting their hours of work - some in their 30s - to avoid tax charges, which are applied to anyone whose pension pot grows by £40,000 or more in a year, or has hit £1m over their lifetime.

Initial findings of the survey also found that:

  • 63% of the respondents said they have either received a substantial pension tax or are expecting to receive one
  • 22% said pension tax charges have forced them to consider early retirement
  • 44% of GPs who responded said they have already reduced or are considering declining out-of-hours work
  • Four in 10 primary care doctors said they have or were considering reducing their workload

Under the current NHS pension scheme, there is no flexibility in the amount of money NHS employees contribute towards their pension – with the highest earners being required to pay 14.5% of their salary.

The annual cap on how much pension pots are allowed to increase by, tax-free, has been set at £40,000 since 2016. At the same time, new rules were brought in reducing the amount of tax-free pension benefits that can be accrued over a lifetime - from £1.25m to £1m.

BMA Scotland GP Committee chair Andrew Buist said: 'These are extremely concerning findings that stretch right across the profession – and a large proportion of GPs who responded to the survey are clear they being forced to cut down the sessions they work as a result of pension tax charges.

'We all know the deep seated problems that exist around recruitment and retention of GPs and there can be no doubt this is making the position substantially worse. It is incredibly frustrating, that at a time when we need to focus entirely on implementing the new GP contract, issues like this should threaten to undermine the progress we are making.

'For example, it is absolutely no surprise that GP out-of-hours services are struggling to cope and fill shifts, when GPs who volunteer may face being financially penalised as a result. These findings have to be a wakeup call to all politicians and prompt the urgent action we know is needed.'

Earlier this month, the BMA warned ongoing Prime Minister Theresa May that the NHS 'is on the cusp of a major workforce crisis and patients will suffer unless there is significant reform to pension taxation'.

It came after the Government announced a review to make pensions ‘more flexible’ for GPs in a bid to address retention issues, which doctors said will not be enough to solve the problem.

Pulse reported in April that practices in Scotland will receive the full funding required to cover the increase in employers pensions contributions

It follows previous suggestions that the Government would not cover all the cost for the hike in the rate - from 14.9% to 20.9% from 1 April - which led the BMA to warn of the ‘extremely damaging’ impact on practices.

Readers' comments (9)

  • GP's contribute their own employers and employees contributions, so its not 14.5% of salary, its up to 28.88%. Please stop misreporting this

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  • Yip, as above true so I stopped adding to the Ponzi scheme. Hammered from both ends, restricted to 10k tax free, and a smaller pension for working harder, 2 years to go tf

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  • The BMA wants tax cuts for wealthy Doctors? Is this the same BMA that has been campaigning for years for the wealthy to pay higher taxes to fund the NHS?

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  • I have just been looking at the BMA website where they give some worked examples . A senior Consultant with a merit award of £6,000 in one year could trigger a tax increase of £6000 x 40 % =£ 2400. Plus a pension increase in value related annual allowance tax charge of another £ 11,000 - so a pay increase of £6000 results in a tax charge of £13,400 - a marginal tax rate of 220 %. My own conclusion of Government policy is that it is designed solely to recirculate money back to the Treasury coffers , whilst all collateral damage to other Government departments is completely ignored. Sir Steve Webb former pensions minister has said - " rather than tinkering with the NHS pension scheme, the Treasury should abolish the ludicrous and capricious system of tapering annual allowances for tax relief"

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  • IN answer to Stelvio I paid roughly 35% of my income (after penision )on tax. It has gone up because of this. If everyone including businesses like Amazon boots etc had to pay this the NHS would be very well off. But no I am penalised more. This is unfair.

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  • The point is really the uselessness and confused thinking behind the BMA.

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  • Dear Pulse,

    Please start spreading your knowledge to medical students. Final years are BMA members too.

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  • Stop paying I to your GP pension and take the "employers" contribution as income to yourself

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  • As Jonathan points out the tax charges are ridiculous and against all natural justice. You earn less money and less pension if you work harder. The UK is sadly becoming a country of ridiculous laws. Take Dr Bawa Garba's case her treatment of poor Jack is taken in isolation ie she did not see the XR till 3pm. The fact that she was attending to another child with meningitis and another with sepsis does not count. She is treated in court as if she was sitting watching TV and drinking tea. This is the UK.
    The much vaunted Francis report is another of these mindless aberrations.
    Mid- Staffs was a 3 star top rated hospital in the 90s. To save money [ 2 million], management cut nursing staff. Christine Hancock warned them that patients would suffer and die if staff were removed.
    So, when they cut staff and patients suffered as a result, what did they do ? Not replace the staff, that would be too simple. Instead, we have a legal chair report costing 13 million with 500 recommendations !!!.
    They saved 2 million on cutting staff and spent 13 million on a Francis report for a predicated [Hancock] outcome.
    They then spent another 40 million on compensation and shutting the hospital, which has become a by word for poor care.
    But hang on, this was a super hospital once.
    Pensions are on a par with this kind of madness.
    You earn less if you work harder!!
    So BMA, perhaps there is a moral to this story. Perhaps we doctors should look better at a work life balance and don't do that extra clinic or management because we will actually earn less.
    The BMA should indicate an ideal earning per year. Go above it at your peril.

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