BMA backs stop-gap plan to end pension tax trap but demands GP guarantees

The BMA has formally backed short-term plans to tackle punitive pension tax rules that have forced thousands of doctors to reduce their working hours - but has demanded further assurances for GPs.

NHS chief executive Simon Stevens announced last month that doctors caught in a pension tax trap that means they lose out financially if they take on extra sessions could 'immediately' return to work - and that the health service would foot the bill for any tax penalties incurred.

Thousands of doctors have reduced their working hours or refused to take on extra shifts to avoid tax penalties that can cost them more than they earn for taking on more work - deepening the NHS workforce crisis ahead of a winter expected to be among the toughest it has ever faced.

The BMA said last month that Mr Stevens' deal appeared to offer a temporary solution, but demanded cast-iron contractual and legal guarantees that doctors would not lose out in future.

Pension tax

Under the deal offered by NHS England and Improvement (NHSEI), any extra tax charges doctors face for 2019/20 will be paid through the 'scheme pays' mechanism - meaning the bill will be paid off from their existing pension pot - but doctors would then be 'fully compensated in retirement for the effect of the 2019/20 scheme pays deduction'.

BMA lawyers have now confirmed that the offer from the NHS contains 'enough detail to bind both employers and NHS England to make these payments with contractual guarantees that these payments will be backed by UK government, even if the employer or NHSEI did not exist in the future'.

The BMA added: 'We are also satisfied that members will not be disadvantaged by any unforeseen tax consequences as a result of using this scheme. Consequently, we believe that clinicians utilising this scheme have a legally binding, contractual entitlement that is backed by UK government, to receive these payments.

'As such clinicians will not be financially disadvantaged should they incur an annual allowance tax charge resulting from their NHS pension scheme in 2019/20.'

Primary care guarantee

However, BMA leaders have called for further guarantees over how the deal will work in primary care, where doctors are not employed directly by the NHS.

A BMA statement says: 'It is essential that doctors working in primary care are covered by these proposals. NHSEI has committed to ensure that is the case and the BMA will work with it to ensure a solution is found to provide similar guarantees for GPs.'

Accountants, meanwhile, say making the proposal work for GPs could prove complex. Andrew Pow, executive board member of the Association of Specialist Medical Accountants (Aisma) said: 'There remains a big problem with GPs in that it's difficult to calculate the annual allowance where historic pension records have not been updated correctly.

'This new scheme places even more need on Primary Care Support England (PCSE) and NHS Business Services (NHSBS) to ensure GP pension records are up to date by the time the 2019/20 estimates of annual allowances need to be completed.


'I suspect that what will happen is that NHSBS will be swamped with protective scheme pays elections for £1 as it can take several years for the actual figures to come through. At least if you have an election in place you can amend it if needed. So bureaucracy will increase.'

He added that it remained unclear how the bail-out for doctors facing tax penalties would be treated from a financial perspective. 'Is it an employment salary, is it an annuity payment?' he asked. 'The tax consequences will have different impacts. This needs clarification from the Treasury.'

Mr Pow also highlighted the possibility that other NHS professionals not covered by the short-term fix - and those in other public sector pension schemes - could challenge the legality of the move.

He added: 'This is not a long-term plan and while a positive intervention we will have to see whether the next government are in a position to do something active around resolving this issue in a clearer way.'

The BMA added: 'While both BMA and NHSEI are clear that a long-term solution to the pension taxation crisis is desperately needed once the next government comes into power, these proposals offer short-term recompense to dedicated clinicians working over the busy winter period so that they are not financially penalised if they receive an annual allowance charge this tax year.

General election pledges

'Due to the structure of this scheme, our members understandably need certainty that these payments will be honoured and made no matter what the healthcare landscape looks like in several decades time.'

The BMA has criticised party manifesto pledges on the NHS pension tax crisis, warning that they offer 'too little, too late' - and that none contain detailed plans for reform.

The BMA has called for the annual allowance mechanism to be scrapped for 'defined benefit' schemes such as NHS pensions.

The BMA statement added that it was 'vital that other pension flexibilities, such as the full recycling of employer pension contributions remain available to ensure that clinicians are able to choose the best solution for their own individual circumstances'.

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