This site is intended for health professionals only

Scottish health secretary urges chancellor to act on the NHS pensions tax crisis

Scottish health secretary Jeane Freeman has urged the UK chancellor to take ‘decisive action’ on the NHS pension tax crisis.

The ongoing crisis began when then-chancellor George Osborne lowered the thresholds at which people had to pay tax on their pensions contributions.

This meant that people would start being charged income tax if they increased the value of their pensions by £40,000 in a single year, or if the total value of their pensions exceeded £1.05million, but higher earners in the NHS pension scheme were disproportionately affected.

Additionally, a taper reduced the pensions tax-free ‘allowance’ the more the individual earned overall. The BMA believes this to be responsible for many doctors reducing their hours or retiring early.

Ms Freeman said: ‘Considerable effort has been expended to date in trying to offset the very real consequences for NHS staff and services of UK Government tax policy.

‘The Scottish Government will continue to act to mitigate the harmful impact of pensions taxation rules on NHSS staff and on frontline service delivery from April 2020 should this prove necessary.

‘It is however clear that a permanent solution is urgently required, and can only be offered by your Department. It is incumbent upon you to take the opportunity of the March Budget to fully and finally remedy the situation, and allow our NHS staff to get on with delivering care without fear of the consequences.’

Dr Andrew Buist, chair of BMA Scotland’s GP committee, told Pulse: ‘It is an inescapable fact that doctors across Scotland are having to decline extra work due to massive and often unexpected tax bills. But even beyond that, it is reducing capacity across primary care as GPs cut their hours out of fears of a tax bill.

‘This letter shows that reality has really hit home with our politicians and underscores the absolute necessity for tax reform, with removal of Annual Allowance when it comes to defined benefit schemes such as the NHS pension scheme.

‘It is good that we have the support of the Scottish Government to keep pushing for the need for pensions tax reform.’

The Treasury previously announced that a review of the pensions annual allowance taper issue, which began last month, will report at the Spring Budget.