More high-earning GPs to pay top rate of tax as Jeremy Hunt slashes threshold

More high-earning GPs will be paying the top rate of income tax after Chancellor Jeremy Hunt announced a lowering of the threshold from £150,000 to £125,140.

Currently, the average earnings for all GPs in England stands at £111,900, meaning many more GPs will fall into the top-rate tax bracket.

Mr Hunt made the announcement in today’s Autumn Statement.

It will mean those earning over £150,000 paying just over £1,200 more a year, he told MPs. In addition, income tax personal allowances will be frozen to 2028, with Mr Hunt admitting that the UK was now officially in a recession.

But while some other Government departments would be expected to cut spending, the NHS will get £3.3bn extra in each of the next two years to deal with inflationary pressures, he said.

Mr Hunt said: ‘I’ve also had discussions with NHS England about the inflationary pressures on their budgets. I recognise that efficiency savings alone will not be enough to deliver the services we all need.

‘So because of difficult decisions taken elsewhere today, I will increase the NHS budget over the next few years by £3.3bn. 

‘Chief executive of the NHS Amanda Pritchard has said this appears to provide sufficient funding for the NHS to fulfil its key priorities. She said it shows the Government is serious about its commitment to prioritise our NHS.’

The announcements on the NHS also included a commitment that the Department of Health and Social Care and NHS would publish an independently verified workforce plan for the numbers of doctors, nurses and other healthcare professionals needed in 5, 10 and 15 years time.

The BMA had urged Mr Hunt to use his new position to put forward legislation for an NHS workforce plan – something that he himself has repeatedly called for in recent years.

Meanwhile, it had been reported that the Chancellor was planning to extend the freeze on GP pension lifetime allowance, leading the BMA to warn that this would further exacerbate pensions issues which are causing doctors to retire early, but there was no mention of it made in the budget statement.

The standard lifetime allowance is already frozen at £1,073,100 until 2025/26 and had been widely expected to be extended until 2028 in line with other allowances and thresholds but experts said clarification might now have to wait until the full Spring Budget. 

Mr Hunt’s statement went onto say the NHS must join all public services in tackling waste in inefficiency, telling MPs ‘we want Scandinavian quality alongside Singaporean efficiency – both better outcomes for citizens and better value for taxpayers’.

He added: ‘That doesn’t mean asking people on the frontline to work harder, but rather asking challenging questions on how to reform all public services for the better.’

To that end, Mr Hunt has asked former health secretary Patricia Hewitt to advise on how to make sure the new ICBs operate efficiently with appropriate autonomy and accountability.

Treasury documents said: ‘The Autumn Statement makes up to £8bn of funding available for the NHS and adult social care in England in 2024/25. This includes 3.3bn to respond to the significant pressures facing the NHS, enabling rapid action to improve emergency, elective and primary care performance and introducing reforms to support the workforce and improve performance across the health system over the longer term.’

Alec Collie, head of medical at Wesleyan Group, said: ‘Most doctors and GPs expect their income to go up each year but freezing tax bands, coupled with high inflation, means people will have less in their pockets in real terms.

‘Higher earners are facing a higher tax bill as the threshold for the 45p tax rate is reduced. This is a move that won’t make much money for the Treasury’s coffers but means less disposable income for higher earners which will do nothing to help a move into recession.

‘The cost of living is already pushing household budgets close to the edge, and today’s news will do little to help those who are struggling. We know that some are having to dip into their savings and pensions to cover living costs, but this should be done carefully and, if possible, with financial advice as it can have a significant impact on future retirement plans.’

NHS England chief Ms Pritchard said in a statement: ‘When the Government – and the country – face such a daunting set of challenges, we welcome the Chancellor’s decision to prioritise the NHS with funding to address rising cost pressures and help staff deliver the best possible care for patients. This shows the Government has been serious about its commitment to prioritise the NHS.’

She added that the NHS ‘is already one of the most efficient health services in the world’ and is committd to ‘further efficiencies’ with ‘over £5bn already freed up’ this year.

‘NHS staff are delivering a huge amount in the face of record demand with 10% more GP appointments than before Covid, an extra 35 million in a year, more support than ever for peoples’ mental health and the highest level of cancer checks while transforming peoples’ lives with innovative treatments such as laser therapy for epilepsy and genetic testing for sick babies and children.

‘While I am under no illusions that NHS staff face very testing times ahead, particularly over winter, this settlement should provide sufficient funding for the NHS to fulfil its key priorities. As ever, we will act with determination to ensure every penny of investment delivers for patients.’

Dr Emma Runswick, BMA council deputy chair, said the Autumn Statement had come at a time when the NHS and its staff were at breaking point.

‘There is a glimmer of hope in that the Chancellor clearly recognises the severe staffing shortages we have in the NHS, announcing the much-needed workforce plan, importantly including independently-verified modelling covering the next 15 years, to be published next year.’

But she said for any workforce plan to be successful in its aims, pay and conditions cannot be ignored and the NHS was witnessing a haemorrhage of medics due to real-terms pay cuts and pension tax rules that punish doctors for going to work.

‘The Chancellor himself recently described the situation of doctors being forced to retire early due to these absurd tax arrangements as a “national scandal” yet today he has chosen not to take any action to end it, as is now well within his power to do.

‘We have been clear with the Chancellor about what is needed and until the Government puts in place a long-term solution, we will continue to see our most highly-skilled clinicians retiring in their prime or reducing hours right when patients need them most. We urge him to work with the BMA’s pensions committee to resolve this.’

Adult social care will also receive £1bn next year and £1.7bn pounds the year after to help free up hospital beds ‘occupied by those who should be at home’ as part of a package that promised more funding for social care overall.