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Hancock: 'I'm in discussions with Treasury about removing pensions tax taper'

Exclusive Health secretary Matt Hancock has told Pulse in an exclusive interview he is in talks with the Treasury about removing the pensions tax allowance taper that the BMA says is responsible for scores of doctors reducing hours or retiring early.

Speaking to Pulse today, he said that he has been ‘working very closely’ with Chancellor Sajid Javid about the future of the taper, after the Treasury announced a review.

Mr Hancock announced his review into pensions taxes in an interview with Pulse earlier this year after reports of GPs cutting their hours or retiring early because they were paying to work.

However, proposals to offer GPs and other doctors the chance to halve their pensions contributions were not well received and were dropped, but further proposals - which gave even more flexibility in their contributions - were equally poorly received.

The BMA said that the only way to prevent GPs leaving the profession would be to remove the ‘taper’, which reduces the tax-free annual allowance the more an individual earns.

Pulse asked Mr Hancock whether the removal of the taper ‘is something you are going to be looking at?’

Mr Hancock replied: Yes. The Treasury has already announced that it is considering changes to the taper and has a review of the taper and I’m obviously feeding into that.

‘Having originally announced in Pulse magazine that I was talking to the Treasury about this I’m delighted to say that the Treasury eventually under the new chancellor announced a review into the operation of the taper and obviously I am working very closely with them on that.’

He clarified that this would be in conjunction with the ongoing pensions proposals.

Earlier this week, shadow health secretary Jonathan Ashworth told Pulse that he would ‘urgently review’ the current pensions tax situation.

How the taper works

Under current rules, people are allowed to increase their pensions pot by £40,000 per year before incurring a tax charge. 

However, this annual allowance reduces, with those earning above £150,000 per year seeing their annual allowance reduce to a little as £10,000. This £150,000 includes all benefits, such as pensions accrual, meaning that realistically anyone earning £110,000 a year plus their £40,000 tax free pensions accrual will be affected. 

This means that GPs could face an increasing tax charge on their pensions, even if they decide to stop contributing to their pensions part way through the financial year.

The BMA has said that, because of this, any attempts to give GPs flexibility in their pensions contributions - which the Government has proposed - is doomed to fail, as it won’t stop them being punished for continuing to work.

GPs have previously warned that this has led to them cutting their hours or leaving the profession altogether, as well as leading to problems with recruitment and retention.

Readers' comments (24)

  • I've been away for a while. But now I'm back!

    Bring on John MacDonald. UK the new Venezuela...

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  • Why don’t they just scrap the AA altogether? Even without a taper many doctors will be stung.

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  • “In discussions with” lol bit better than promising to “take a look” at it. That’s the health Secretary folks. Enjoy him

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  • When???
    Winter is coming...actually It is here.
    The government has known about this fiasco for years now.
    I have been penalised badly for working hard.
    I do not do out of hours like I used to and now I am actively looking at full time non nhs work for all those annoyed patients who cannot see a gp. Of course this will be in a tax efficient vehicle...but it will at least pay the bills and keep a roof over my family.

    PS the roofer wants £5k to fix a leak. I should have been a roofer or at least married one.

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  • Vinci Ho

    Folks ,please educate my poor English :
    When we make a promise , we say ‘hand on my heart’ , right ?
    For the health secretary, what is the meaning of ‘ Hand on my c**k?’ I wonder 😈😂🤣😅

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  • doctordog.

    They aren’t going to budge on this.
    Besides time away from work has become more valuable than the loss of total earnings.

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  • I’d suggest he get a move on while there’s still some full time GPs left.

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  • All the parties are threatening to increase public spending by increasingly ludicrous amounts.
    There will be no tax cuts.

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  • The tens of thousands ££££ in extra tax, I paid in recent years, I assume, are unlikely to be reimbursed ?
    Whatever the treasury may brew up will not come into force before next tax year.
    Sorry guys , I’ll be off into the sunset as from 1st July, done, dusted , retired , lost to the profession... one FT male partner, EU migrant, less, good luck with finding a replacement .

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  • I don't earn anything like £150K - it's the lifetime allowance that will see me retire early. I can't wait (to be honest it would be slightly disappointing if they gave me a good reason to stay - other than if they made the job itself bearable).

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