Conservative pledge for pension tax 'review' dismissed by BMA

A Conservative manifesto pledge to hold an 'urgent review' of punitive tax charges that have fuelled an NHS workforce crisis has been rejected by the BMA.

Tax return (Photo: Drazen/Getty Images)
Tax return (Photo: Drazen/Getty Images)

The Conservative manifesto promises to 'address the "taper problem" in doctors’ pensions, which causes many to turn down extra shifts for fear of high tax bills'.

It says: 'Within our first 30 days, we will hold an urgent review, working with the BMA and Academy of Medical Royal Colleges (AoMRC) to solve the problem.'

Punitive tax bills have forced many doctors to reduce their working hours and turn down extra shifts, leaving the NHS facing a major workforce crisis heading into winter.

Scrap the taper

But the BMA's official response to the Conservative manifesto dismissed the offer of an urgent review as inadequate, warning: 'A commitment to a review is not new and not what is needed.

'We need action. The next chancellor must immediately scrap the damaging annual allowance and tapered annual allowance in defined benefit pension schemes to ensure that no doctor is penalised for going above and beyond for their patients.'

NHS England confirmed last week that it would take 'exceptional action' to address the problem in the short term - offering to pay off doctors' tax bills for the 2019/20 financial year in a bid to encourage them to take on more work.

BMA leaders have called for more detail and warned that the offer - which would see doctors' tax bills paid off from their own pension pots through the 'scheme pays' mechanism, on the basis that their pensions would be topped up when they retire to cancel out the loss - needs to be 'guaranteed contractually and legally', particularly for doctors many decades away from retirement.

NHS pension tax

Accountants have warned that 'significant uncertainties' remain with regard to the NHS England offer, which has been endorsed by health and social care secretary Matt Hancock.

BMA calls for the annual allowance limit to be scrapped for defined benefit schemes such as NHS pensions come just over a month after the Office for Tax Simplification, which provides independent advice to the government on tax, suggested the move in a formal report.

The OTS report welcomed an 'encouraging' government announcement earlier this year that the Treasury would review annual allowance tapering rules.

In a bid to address the impact of pension tax on the NHS workforce, the government has proposed to create the 'most flexible NHS pensions ever'. It is consulting on a scheme to help doctors avoid hitting the annual allowance cap by reducing their pension contributions and slowing down the growth of their pension pots.

These proposals have been heavily criticised, however, with experts warning the move will simply slash the value of doctors' pensions and may not go far enough to remove the disincentive to take on extra work - and health and social care secretary Matt Hancock has admitted this option could be ditched if the Treasury reforms the annual allowance mechanism.

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