GPs facing up to £50k in pensions tax bills as advisers report 'sharp rise' in demand
There has been a 'sharp rise' in the number of GPs seeking pension advice, with some GPs facing personal bills of up to £50,000, a financial planning and investment firm has reported.
Tilney said it had received nearly 50 consultants and GPs appointment requests via their website to meet with financial planners over the past month.
Tilney chartered financial planner Gary Smith said the firm has seen a 'sharp rise in the number GPs and consultants seeking specialist financial planning advice as a result of being impacted by more complex pension allowances'.
He said: 'The issues and circumstances for GPs and consultants differ but ultimately stem from two changes to the pension allowances. First, and foremost, was the introduction of the tapered annual pensions allowance on 6 April 2016 and secondly, successive, sharp reductions in the lifetime allowance from £1.8 m in 2011/12 to a current level of £1.055m.
'The tapered annual allowance is incredibly complicated and highly punitive for those subject to it, as most senior medical professionals are.'
Mr Smith said that some of his clients reported to be faced with tax bills of up to £50,000, causing 'considerable anxiety'.
He said: 'I’ve seen recently £45,000- £50,000 tax bills because those people had exceeded their annual allowance. Because we haven’t received any additional remuneration to fund that tax and it’s purely a deemed increase in the value of that pension benefits, they then have to use their personal savings to pay for that tax or ask the scheme to pay.
'What we’re also seeing is people either opting out of the scheme or choosing to retire early and go and work on a locum basis, ending up in a very similar financial position they would have been if they worked full time and have all the stress associated with being a GP.'
Under the current NHS pension scheme, an annual allowance worth £40,000 limits the amount of money that can go into the pot each year.
The annual allowance starts to reduce from this level for high-earners with total income over £150,000 per year. The minimum tapered annual allowance is £10,000, which only applies to those who earn more than £210,000.
GP leaders previously warned that the annual allowance and concerns over large tax bills have caused serious damages to recruitment and retention, with doctors either reducing their hours or taking early retirement as a result.
National Association of Sessional GPs (NASGP) chair Dr Richard Fieldhouse said: 'On the NASGP member forum, by far the biggest area of conversation is about financial matters because we just don’t know what we don’t know. My experience, so as other GPs, is that we don’t realise there are so many pitfalls you can fall into.
'When doctors are most experienced, when they’re possibly of the most value they’re ever going to be for the NHS after years of learning and wisdom and it’s too expensive being a doctor - they face dramatic tax bills, effectively working for nothing - why would they stay?'
In January, Pulse revealed that health secretary Matt Hancock was in discussions with the Treasury over changing the tax treatment of pensions due to the effect on GP retention, saying it is the ‘biggest concern’ GPs raise with him. However, there has been no reported movement on this issue.
A Treasury spokesperson said: 'We are aware of concerns raised by NHS staff and the Treasury is discussing the issue with the Department of Health and Social Care.'