Pension tax plan 'will fail to solve NHS workforce crisis', BMA warns

BMA leaders have warned that raising the income threshold at which tax on pensions kicks in would fail to solve the NHS workforce crisis, amid reports the move is being considered by government.

Pension tax warning (Photo: Andrew Brookes/Getty Images)
Pension tax warning (Photo: Andrew Brookes/Getty Images)

Thousands of high earners are in line for a 'tax windfall', according to The Times, because the Treasury is planning to raise the income threshold at which the tapered annual allowance takes effect in a bid to stop tax on pensions undermining the NHS workforce.

NHS capacity has been severely undermined by tax on pensions - with thousands of doctors forced to reduce their working hours across primary and secondary care to avoid punitive charges.

But BMA leaders have warned that the plans reported to be under consideration by the government - which would see the income threshold for the tapered annual allowance raised from the current £110,000 to £150,000 - would fail to solve the NHS pensions crisis.

Pension tax

BMA pensions committee chair Dr Vishal Sharma said: 'In its election manifesto, the government pledged to "address the taper problem", but this proposal would do no such thing.

'It does not fix the fundamental problem of doctors being forced to limit the work they do to prevent being hit with significant charges on their pensions and many will still in effect be paying to go to work.'

Dr Sharma reiterated the BMA stance that the annual allowance mechanism should be scrapped completely for 'defined benefit schemes' such as NHS pensions.

He added: 'Simply raising the threshold income would not remove any of the complexity of the taper, nor the threat of doctors facing a "tax cliff" when their income increases through promotion or taking on additional work. Indeed, unless there is also an increase in the level of adjusted income, this proposal would only make this "tax cliff" steeper.'

Government review

GPonline reported last week that BMA officials were set to meet imminently with the Treasury to discuss solutions to the NHS pension crisis. The government has now begun a review it promised would begin within 30 days of the general election, and the BMA has said it is determined that a solution to the problem should be in place by April this year.

NHS chief executive Sir Simon Stevens unveiled a plan to cover the cost of pension tax bills in 2019/20 to encourage doctors back to work - although it remains unclear how this will work for GPs.

Dr Sharma added: 'We’ve had a year of inaction with flexibilities and consultations. Doctors and our patients desperately need an immediate solution that is simple and solves the problem completely; the NHS cannot cope with further half-measures.

'The BMA firmly believes that scrapping the annual allowance and tapered annual allowance in defined benefit schemes – as suggested by the government's own advisers, the Office of Tax Simplification – is the only viable solution. Without scrapping the annual allowance in defined benefit schemes, the NHS will continue to haemorrhage doctors at a time when it can least afford to.'

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