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Treasury is ignoring doctors’ concerns over pensions tax charges, says BMA

The chancellor is ignoring warnings from the BMA that the current tax rules around pensions is causing doctors to either reduce their hours or leave the profession. 

The BMA has written several letters to the chancellor Phillip Hammond to warn of the ‘perfect pensions storm’ that will come from the current pension and tax rules.

However, it said that it hasn’t received a reply from Mr Hammond, and revealed that 1,600 BMA members have written to their local MPs as a result of the inaction.

It has published one of its letters to the chancellor, which outlines the consequences of the current regulations and warns that, without ‘tangible reform’, doctors could reduce their hours, retire early or leave the health service altogether to avoid extra income that would take them over the tax threshold. 

The letter has been sent by BMA Consultant Committee chair Dr Rob Harwood, but it covers all doctors, including GPs. 

Under the tax rules, anyone whose lifetime pensions pot is above £1.05m or whose pensions pot grew by more £40,000 over a year would be hit by a tax charge which, for many GPs, makes it financially unviable to continue working.

Health secretary Matt Hancock exclusively revealed to Pulse earlier in the year that he was in talks with the Treasury around changing the tax rules in an attempt to ensure GPs don’t get punished from working extra shifts, and to prevent GPs from retiring early.

Yet the BMA is now saying that nothing is being done about this.

Dr Harwood said: ‘Having written to the chancellor several times on this matter, we are disappointed the Government has neither listened to us or advanced any proposals of its own to address the urgent issues we highlight, or even to acknowledge the solutions we recommend.

‘The BMA has always sought constructive dialogue with the Government and NHS Employers and has taken every opportunity of making clear the grave threat faced by the health service to those who have both the power and responsibility to effect change.’

Dr Harwood continued: ‘The Government’s window of opportunity is closing fast, and we urge the Chancellor a final time to make reform of pensions taxation an immediate priority. Action is needed now, before doctors are compelled, by these punitive rules, to reduce their working hours or quit the health service. Doctors are facing the very real prospect of effectively working for no pay and that is untenable.

In the published letter to the chancellor, Dr Harwood said: ‘It cannot be right that doctors working extra hours to reduce waiting lists or cover rota gaps are then hit with additional tax bills greater than the value of the extra hours worked.

‘Given the refusal of both the Government and NHS Employers to take steps to rectify or mitigate this, it is now our responsibility to inform our members that current regulations, particularly the Annual Allowance and Tapered Annual Allowance, are disproportionately and unfairly impacting them.

‘Unless action is taken, our only option is to reduce the amount of time we work for the NHS, which will through no fault of our own, be detrimental to our patients and to the country’s health service – exactly what the BMA has been trying to avoid.’

A Treasury spokesperson said: ‘We want people to save into a pension, which is why we allow the majority of savers to make contributions tax-free.

‘And doctors, like all NHS staff, benefit from one of the best available defined benefit occupational pensions schemes. But we do have to get the balance right between encouraging saving and managing government finances, which is why we restrict the tax relief available for the highest earners.

‘We are aware of concerns raised by NHS staff and the Treasury is discussing the issue with the Department of Health and Social Care.’

The Government has recently been in hot water with the BMA, when they opposed the health secretary’s reform to suspend pension benefits for GPs if they are accused of a crime.

Meanwhile, NHS Pensions is still unclear on the impact of the locum pensions changes implemented at the beginning of this month.

In Scotland, the BMA is in still in talks with the Government there to discuss when the employer pensions contributions will be fully funded.