Ahead of the 31 January 2017 deadline for filing tax returns for the 2015/16 financial year, accountants have highlighted the potential impact of changes to pensions tax that took effect from April 2016.
Changes to the annual allowance and lifetime allowance mean that higher-earning GPs could face an increase in excess of £20,000 in the tax bill they have to pay next year.
GP leaders say that although the NHS Pension Scheme remains the best option for most doctors - particularly those early in their careers - rising costs mean that many older doctors are considering quitting the scheme, or have already suspended contributions.
From the 2016/17 financial year, the annual allowance of £40,000 was tapered for anyone whose total income - including pension savings and investment income - exceeds £150,000. For people earning over £210,000 including pension savings and investment income, the annual allowance drops to £10,000.
Doctors whose annual growth in pension benefits exceeds the annual allowance will be taxed at a rate between 40% and 45% on the excess.
Luke Bennett, a committee member at the Association of Specialist Medical Accountants and partner at accountancy firm PKF Francis Clark, said: 'By our reckoning one in 10 GPs will be affected and the sums involved are pretty hefty. I have been warning some of my GP clients to expect additional tax charges of over £20,000.
'Normally when you pay more tax it’s because you’ve earned more money. But there will be no more money in GPs’ pockets to pay next year’s tax bill than there was this year.'
BMA pensions committee chair Dr David Bailey warned that many GPs may not realise until very late if they were subject to extra tax, because their annual income only becomes clear sometime after the financial year-end.
'People will have to plan very carefully. There is no extra money - it it just a claw-back,' he warned.
With GPs paying a higher rate of employee pension contributions - up to 14.5% - than most other NHS employees plus employer contributions, for some GPs the NHS Pension Scheme was becoming unattractive, he warned.
'A significant number of people will be considering leaving the NHS scheme. If you find you are getting less and less tax efficiency by [staying in], people will take a view. Everyone's position is different and for the vast majority the NHS pension still delivers a good pension. But it is certainly looking less attractive than a few years ago.'