Pension blow to high earners
By Ian Quinn
High-earning GPs face ‘significant' financial losses under plans to reduce tax relief on pension contributions, accountants are warning.
GPs earning more than £150,000 in gross income have been warned they face losses of up to £15,000 a year when the revised tax rules come into play from April 2011.
Bob Senior, director of medical services at accountancy firm Tenon, said it was holding urgent talks with the Treasury this week to find out who will be hit by the changes, but said some GPs would lose a ‘very significant' amount.
About 10-15% of all GPs are set to be affected, with any who have a take-home income of more than £125,000 likely to be caught in the net.
The Government's plans are set to land a triple blow on high-earning GPs, who already face reductions in personal allowances once earnings go above £100,000 and a 50% income tax rate on earnings over £150,000 from April 2010.
Dr Andrew Dearden, chair of the BMA pensions committee, said: ‘It will be the highest earning GPs who will feel that loss of tax benefit. For them it will be a significant tax increase.
‘There is a lot of confusion and uncertainty over exactly who is going to be affected but we are talking about a very significant amount of money.'
He added GPs who take on extra work to top up their income ‘may now give up that work as it will put them over the threshold.'Dr Andrew Dearden