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Doctors paying extra £18,500 in pensions tax, claims BMA Scotland

Scottish doctors are faced with an additional £18,500 bill as a result of the changes to pensions tax rules, a new BMA survey has claimed. 

BMA Scotland is running a survey of its members and has found that two-thirds of respondents had either received a substantial tax bill on their pensions or were expecting to receive one. 

It claimed that, among those who provided figures, the average tax paid on pensions was £18,500.

The BMA said these unexpected pension tax bills are ‘punitive’ and risk jeopardising vital NHS services. 

The interim findings, which include responses from 354 consultants, GP, staff and associate specialists, also showed that GPs were forced to reduce or are planning to reduce their hours to avoid being caught in the pension trap. 

The BMA previously warned GPs are retiring early or cutting their hours of work – some in their 30s – to avoid tax charges, which are applied to anyone whose pension pot grows by £40,000 or more in a year, or has hit £1m over their lifetime.

Initial findings of the survey also found that:

  • 63% of the respondents said they have either received a substantial pension tax or are expecting to receive one
  • 22% said pension tax charges have forced them to consider early retirement
  • 44% of GPs who responded said they have already reduced or are considering declining out-of-hours work
  • Four in 10 primary care doctors said they have or were considering reducing their workload

Under the current NHS pension scheme, there is no flexibility in the amount of money NHS employees contribute towards their pension – with the highest earners being required to pay 14.5% of their salary.

The annual cap on how much pension pots are allowed to increase by, tax-free, has been set at £40,000 since 2016. At the same time, new rules were brought in reducing the amount of tax-free pension benefits that can be accrued over a lifetime – from £1.25m to £1m.

BMA Scotland GP Committee chair Andrew Buist said: ‘These are extremely concerning findings that stretch right across the profession – and a large proportion of GPs who responded to the survey are clear they being forced to cut down the sessions they work as a result of pension tax charges.

‘We all know the deep seated problems that exist around recruitment and retention of GPs and there can be no doubt this is making the position substantially worse. It is incredibly frustrating, that at a time when we need to focus entirely on implementing the new GP contract, issues like this should threaten to undermine the progress we are making.

‘For example, it is absolutely no surprise that GP out-of-hours services are struggling to cope and fill shifts, when GPs who volunteer may face being financially penalised as a result. These findings have to be a wakeup call to all politicians and prompt the urgent action we know is needed.’

Earlier this month, the BMA warned ongoing Prime Minister Theresa May that the NHS ‘is on the cusp of a major workforce crisis and patients will suffer unless there is significant reform to pension taxation‘.

It came after the Government announced a review to make pensions ‘more flexible’ for GPs in a bid to address retention issues, which doctors said will not be enough to solve the problem.

Pulse reported in April that practices in Scotland will receive the full funding required to cover the increase in employers pensions contributions

It follows previous suggestions that the Government would not cover all the cost for the hike in the rate – from 14.9% to 20.9% from 1 April – which led the BMA to warn of the ‘extremely damaging’ impact on practices.