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Welsh Government ‘fundamentally disagrees’ with NHS plan to pay for winter pension tax

The Welsh Government has said it ‘fundamentally disagrees’ with NHS plans in England to pay for doctors’ pension tax charges this winter, stressing the measures are merely a ‘sticking plaster solution’ to wider problems.

Wales’ health minister Vaughan Gething criticised the UK Government after it confirmed that NHS England will pay doctors’ pensions tax upon retirement to ensure they can take on extra shifts without being charged for breaching their annual allowance. 

The proposals, approved by health secretary Matt Hancock in November, will allow GPs to defer tax charges by electing ‘scheme pays’ when submitting pension forms from April onwards so that the NHS later pays for the costs upon their retirement.

In a letter sent on 22 January, Mr Gething told Mr Hancock that the money to pay for the charge should not come out of the NHS budgets in each of the UK countries and should instead be paid for by the Treasury. 

He said the Welsh Government had been left with ‘no option’ but to offer the same proposal to doctors in Wales – yet stressed the root cause of the problem was the UK Government’s failure to address annual and lifetime tax-free allowance limits on pensions.

He said: ‘The Welsh Government fundamentally disagrees with the solution which has been implemented in England. The tax issue should be resolved by the Treasury, not left to the health budgets of each of the four UK Governments to absorb.

‘However we were left with no option but to also consider putting in place the same temporary solution while the UK Governments is consulting on changes from April 2020.’

Mr Gething said he was disappointed the Government had so far failed to engage with the devolved nations on how to resolve the tapered annual allowance problems – which see the highest earners have their tax-free pensions allowance cut back, sometimes to as low as £10,000. 

He said: ‘While I have noted that it has recently been confirmed by the Treasury that the outcome of the review into the taper will be announced alongside the budget in March, I am disappointed that there has still been no engagement with devolved national governments. 

‘The harm being done to the NHS across the UK by the issue is undeniable. The significant loss of activity is being felt by our patients and it is hard to understate the loss of goodwill from our staff.’

A UK Government spokesperson said: ‘We want to make sure that doctors spend as much time as possible treating patients. That’s why we are urgently reviewing the pensions taper to ensure doctors aren’t turning down extra shifts for fear of high tax bills.

‘The work builds on a review announced in August which fully engaged with all of the devolved administrations. If the devolved administrations have additional evidence to submit we would welcome further engagement.’

The Government has begun its review of how problems with pension tax charges can be resolved in the long term, with unconfirmed reports suggesting it will raise the threshold income at which high earners see their tax-free allowance tapered.

Meanwhile, the BMA recently warned it had received no details so far about how NHS England will pay GPs’ pension tax charges this winter.