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Independents' Day

GPs told they could owe thousands extra in tax after NHS Pensions error

Exclusive GPs are seeking out their medical accountants in ‘a mad panic’ because of erroneous income statements from NHS Pensions that overestimate their tax liabilities by ’thousands of pounds’, it has been claimed.

Accountants have warned some statements from NHS Pensions inform GPs that they have exceeded their pensions tax allowances for the 2013/14 year, and were therefore likely to be liable for thousands of pounds extra in tax bills.

However, NHS Pensions has revealed that around a quarter of all provisional statements for 2013/14 were erroneously billed as ‘final’ when they were not, which accountants said was ‘just another example of the level of disarray’ surrounding GP pensions.

Keith Taylor, an accountant at BW Accountants, said that NHS Pensions had overestimated their earnings by up to £50,000, and had received ‘final’ letters saying that ‘our records show the growth of your NHS benefits exceeds the annual allowance’ and that they now ‘need to take action’ to work out their tax liability.

However, Mr Taylor said that many of the estimates are inaccurate, and GPs’ final earnings for the year will not be certified until February or March.

He added: ‘It is really just causing a whole load of anxiety based upon figures that are incorrect or not even due to be with the pensions agency for several months yet. I have had probably about a dozen clients since yesterday sending through these, panicking like mad because they think they’ve got a tax liability.’

Mr Taylor added : ‘To get the level of pension growth that they are forecasting for 2013/14, one of my GPs would have had to have a pay rise of £48,000 in the year. Now clearly with what is going on in primary care, that is never going to happen and that makes me wonder where on earth they are getting their figures from for their 2013/14 estimated earnings.

‘If you put in the correct figure, i.e. the same earnings as the previous year, the GP actually doesn’t even breach the limit so he shouldn’t have had any notification whatsoever.’

Baker Tilly head of medical services Bob Senior said: ‘There are actually two versions of the letter going out [and] they both have the same first line of the heading. For those letters that refer to 2013/14, [they] are not based on final figures, are often wrong and [GP]s don’t have to pay any tax liabilities until next year. In the case of the 2012/13 letter, the figures are indeed final [and] if they have exceeded the annual allowance… they can set off any unused allowances from the previous three years against it.

‘If those unused allowances don’t cover the excess then any additional tax should be paid as soon as possible since it should have been paid on 31 January 2014 and interest will already be accruing.’

He added: ‘Goodness knows why the pensions agency couldn’t have made the two versions of the letter more distinct. Referring to both as the “final” annual allowance pension savings statement was incorrect and pretty unhelpful to say the least. Probably simply something dumb like someone copying and pasting without thinking about it.’

A spokesperson for NHS Pensions said: ‘NHS Pensions has already received the final pay figures for the 2013/14 period for some GP’s which has enabled some final statements to be issued. Where final pay figures have not been received a provisional statement is issued.’

‘However, in the 29 August statement run of just under 2,000 statements (the first for 2013/14) we have identified that just fewer than 25% were incorrectly flagged as being final. The figures shown on the statements are accurate but, as with all provisional statements, still need to be verified on receipt of the final pay figures from the GPs. This problem has been rectified for all future 2013/14 statement runs. We are currently writing to the 450+ GPs affected with our apologies for this error and providing a re-printed statement which is correctly identified as being provisional.’

The warnings follow errors in provional pensions statements last year saw GPs wrongly told they faced tax demands of up to £17,000. Those miscalculations came about because of a Government change to tax relief in 2011/12, which cut the tax-free pension contributions that individuals were able to make from £250,000 to £50,000.

Readers' comments (8)

  • Islands in the sun....are much more fun....come to new zealand, .... you can ring the tax dept...and they chat back...usually just down the road...we go fishing together...#newzealand 1000 gps short...let your kids grow up real wild.

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  • If I where under 35, MRCGP and no capital investment in a partnership I would be there like a shot.
    I would urge anyone in such a psotion to go and not feel bad about it.
    Remember it was " the brain drain" of the late 60's that finally shocked politicians into a (brief) period of taxation rationality and fair wage increases for state employees.

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  • Anonymous | Salaried GP | 05 September 2014 11:09am

    damn it sounds too good to be true.

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  • Sometimes the grass is really greener??

    It is in New Zealand, I've been there!

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  • Complete disarray is putting the problem mildly! Nhs pension agency forms usually do not become available till December. The tax balance payment becomes due the coming January end. That leaves one month for accountants to estimate pensions tax liabilities. Nhs pensions sending out statements 7 months after tax is due is a complete joke! What a mess!

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  • Bob Hodges

    I've though of a way to solve the public health problem we have as a result of alcohol.....

    Put the NHS pension agency in charge of drink production and distribution in the UK!

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  • I think the problem arises elsewhere and the NHSP may be wrongly getting a rap for errors at the Primary Care Agency level. Those are the people who calculate and dedcut your pensions and generate data that is passed on to the central NHSP computers.

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  • Still like Bob Hodges' suggestion

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