Pension rise could be swallowed by tax charge

Thousands of GPs who retired between 2004 and 2008 risk a hefty new tax charge after cash the DoH tried to strip from their pensions was reinstated.

GPs who retired in this period will receive top ups worth up to 20 per cent of their pension after the GPC won a High Court battle to prevent the DoH imposing a cap.

The uplift is pushing some GPs over the pensions tax threshold - the lifetime tax allowance (LTA) - introduced in 2006, exposing GPs who do not protect themselves to tax charges of 55 per cent.

'Anyone with a pension over £56,000 before the changes potentially comes into the new bracket and needs to act,' said Stuart Williamson, partner at medical accountants WilliamsonWest.

Steve Caps, of medical accountants Ramsay Brown and Partners, said GPs with smaller NHS pensions and private cover also need to protect themselves.

Under rules introduced two years ago, pension funds are tax free if they were worth less than the LTA limit of £1.5 million on 5 April 2006. Above the LTA, they are taxed at 55 per cent.

All GPs who receive an uplifted pension must make an LTA declaration to NHS Pensions by early November, warns Mr Williamson. They must also apply in this financial year to HM Revenue and Customs to have their pension capital protected against tax charges.

'It is inevitable that some people will find themselves with a tax charge they were not expecting,' Mr Caps warned.

'Do not ignore the letters from the Pensions Agency. Assume you are affected even if you may not be,' he said.

The Pensions Agency is revising the earliest pensions first and Mr Caps advises all GPs who retired between April 2004 and April 2006 to ask the Pensions Agency for a calculation of their revised pension and lump sum at 5 April 2006.

prisca.middlemiss@haymarket.com

PENSION TAXATION: 55% tax could apply to pensions

Source: HM Revenue & Customs.

Comment below and tell us what you think

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register

Already registered?

Sign in

Follow Us:

Just published

UK COVID-19 vaccination programme tracker

UK COVID-19 vaccination programme tracker

GPs across the UK are playing a leading role in the largest-ever NHS vaccination...

GP-led sites behind almost three quarters of COVID-19 jabs in England

GP-led sites behind almost three quarters of COVID-19 jabs in England

GP-led vaccination sites have delivered nearly three quarters of COVID-19 vaccine...

GPs should ignore calls to throw away usable COVID-19 vaccine, says RCGP

GPs should ignore calls to throw away usable COVID-19 vaccine, says RCGP

Suggestions that vaccination sites should throw away usable doses of COVID-19 vaccine...

GPs urged to use influence to dispel COVID-19 vaccine myths and boost BAME uptake

GPs urged to use influence to dispel COVID-19 vaccine myths and boost BAME uptake

GPs have been encouraged to use their ‘huge influence’ to bust misinformation around...

Six in 10 over-80s vaccinated against COVID-19 as figures expose regional variation

Six in 10 over-80s vaccinated against COVID-19 as figures expose regional variation

Six in 10 people aged over 80 in England received a first dose of COVID-19 vaccine...

Summary of changes to the GP contract 2021/22

Summary of changes to the GP contract 2021/22

The BMA and NHS England have agreed minor changes to the GP contract for 2021/22....