GPs face tax on pensions as inflation rises

High inflation could force an increasing number of GPs to pay up to 50% tax on part of their annual pension contributions, accountants have warned.

Dr McCarron-Nash: fears over paying tax on pensions in the future could put off younger part-time GPs
Dr McCarron-Nash: fears over paying tax on pensions in the future could put off younger part-time GPs

The GPC is advising GPs to seek independent financial advice if they think they will be affected by the reduction from £255,000 to £50,000 of the annual cap on pension contributions, which came in last year.

This year's high rate of inflation - the Consumer Prices Index rose to 3.5% in March - means that more GPs are likely to reach the limit as their pensions are 'dynamised' to maintain their value against inflation.

Senior manager at accountants PKF Richard Vickery said this change would affect one third of his GP clients.

He said: 'Normally we would look at GPs who are earning more than £120,000 but this year we will be looking at those GPs in the pension scheme who are earning more than £90,000 because of the rise in inflation being so high.

'This will be a particularly gruesome year. It should be much easier than this.'

GPC negotiator Dr Beth McCarron-Nash said it will be a double whammy for 'people who have worked hard'.

Dr McCarron-Nash said fears over paying tax on their pensions in the future could put off younger part-time GPs, the majority of whom are women, from working full-time in the NHS.

She added: 'It would be a real shame to lose those people from working in the NHS if they choose to work outside it part-time.'

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