Many GPs could miss out on reclaiming their pension tax charges for 2019/20, with the potential for individual GPs to miss out on ‘thousands or potentially tens of thousands of pounds’.
Grassroots organisation GP Survival said the matter, which affects GPs in England, comes as a result of of a lack of information from NHS Pensions; a time lag in receiving notice that they’ve breached the payment threshold; and Capita having lost their data.
For the 2019/20 tax year, GPs facing a tax charge over the pension savings annual allowance threshold can have this charge paid by the NHS pension scheme by filling in and returning a scheme pays election and a compensation form.
To access the compensation, GPs will use the ‘scheme pays’ arrangement already available to NHS pension scheme members, which usually allows tax charges to be deferred until retirement.
The Government made the compensation available in 2019 in order to allow clinicians to take on more shifts or sessions without worrying about an annual allowance charge on their pensions.
The NHS Business Services Authority (NHSBSA) recently announced that the deadline for GPs to use the voluntary scheme pays to cover their annual allowance charge for that year has been extended to 31 March 2022, due to the impact of the Covid pandemic.
However, wealth management company Quilter has warned that ‘GPs in particular’ may not find out about their 2019/20 annual allowance liability until after the revised March 2022 scheme pays deadline.
Figures obtained by the firm via an FOI to NHSBSA show that only 2,100 doctors, including GPs, have used scheme pays so far, even though more than 7,600 have exceeded the standard allowance.
They also show that the number of NHS staff who have breached the standard annual allowance dropped to 7,600 in the 2019/20 tax year from a peak of 24,000 in 2016/17, stating that this is however ‘due to a lag in reporting rather than fewer people breaching the allowance’, and that this should ‘increase significantly’ once records are updated.
It said there are likely many more who have exceeded the tapered annual allowance, adding that ‘there is a risk that many doctors may miss out on the compensation that they were promised’.
Graham Crossley, NHS pension specialist at Quilter, said he is ‘surprised’ by the low number of applications for scheme pays at present.
And he added that to avoid this issue in future, the system should be changed to allow doctors to apply within a four-year timeframe, ‘giving them ample time to find out about any liabilities and organise their finances’
GP Survival chair Dr John Hughes told Pulse that the information on GP pensions tends to be ‘18 months to two years behind reality’, meaning some GPs don’t have access to real-time information.
He said: ‘Most people who do have access to their total rewards statement find that it is grossly out of date, and several years behind, so it is difficult to apply for a reimbursement when you don’t actually have the data on what you have paid, and whether that’s potentially breaching a threshold or not.
‘The problem is that by the time most GPs find out what is going on with their pension payments, it’s too late for any of these windows. It’s much easier for hospital staff, because they get their data in real-time on their payslips.’
He added individual GPs could risk missing out on ‘thousands or potentially tens of thousands of pounds’, given the way GP earnings are calculated ‘plus the fact that a lot of GPs would have built up pretty substantial pension pots’.
GP Survival campaign lead Dr Nick Grundy told Pulse that the important question for the 2019/20 tax year is whether the GPs affected are all aware they need to submit a scheme pays application.
He said: ‘No one really knew about the annual allowance tax charge until they started getting letters from NHS Pensions. If you’re in that bracket, then by now you know about it. My concern is that there will be some GPs who have not had letters from NHS Pensions saying you have an annual allowance tax charge.’
‘This ties into the issues with Capita, where if they have lost your end-of-year pension forms, nothing would ever get to NHS Pensions. We know locums are likely to have had forms lost by PCSE and are unlikely to have up-to-date pension records, so those people may well have tax charges they don’t yet know about, and might not know about for another five years until PCSE sorts that out.’
He added that missing data is likely affecting ‘enormous numbers’ of people – some who will be affected by pensions saving statement issues, meaning those people risk getting a huge tax bill plus penalties in five years time.
He said: ‘Everyone who thinks they might possibly have an annual allowance tax charge should put in for a £1 scheme pays request before the deadline, because if you do that, you can adjust the amount later.’
The compensation policy came in after GPs and consultants were left badly affected by former chancellor George Osborne’s decision to lower the tax payment thresholds, with some staff losing money by taking on more shifts.
A Capita spokesperson said: ‘NHS Pensions created an amnesty form for GPs to submit their earnings certificates in December 2018, and it remains available on the NHS Pensions website to download and submit to PCSE. In addition, the [recently] launched PCSE portal will allow practitioners to see their records from 2014 onwards and input any missing information.
‘PCSE recently communicated with GPs identified as having a gap in their records dating back to 2014 to enable these practitioners to update their records accordingly. As a result of our communication with GPs over the last year, PCSE has seen a significant increase in submissions of annual certificates and self-assessments.’