A group of doctors overpaid pensions tax to the tune of £11m, a financial advisory firm has unveiled.
More than 400 retired doctors who paid Lifetime Allowance (LTA) tax on their pensions, and are members of wealth manager Quilter, could have benefited from Individual Protection 2016 (IP16) protection.
IP16 was introduced to help those with pensions valued above a certain threshold to protect their LTA from tax charges up to £1,250,000, based on the value of pension benefits in April 2016. This adds up to around £11m in tax charges that doctors could have collectively saved.
Graham Crossley, NHS pension specialist at Quilter, who found this out from a Freedom of Information (FOI) request, said: ‘This Freedom of Information data illustrates how an extremely complicated pension taxation system in the UK can cause significant numbers of doctors to fall through the cracks and ultimately pay much more in pension tax than needed.
‘There remain numerous problems surrounding public sector and NHS pensions which desperately need the Government’s urgent attention, but it is a pleasure to unearth this opportunity to do some good and help a group of people that have spent their careers helping others.’
The NHS Business Services Authority has agreed to write to affected Quilter members, who are eligible to apply for a reimbursement, and inform them of their options.
It comes as the pensions ombudsman has upheld a complaint against Capita and the NHS Business Services Authority (NHS BSA) for the ‘negligently’ handling the pensions contributions of a doctor who was later hit with a hefty tax bill.
It also comes as the BMA criticised last week’s Budget statement, repeating calls for the Government to reform pension taxation to avoid doctors facing large tax bills.