NHS England Confirms Emergency Action on Pension Tax
NHS England has confirmed it will take urgent action on to ensure NHS workers who exceed their annual allowance during this financial year will be able to take on additional work without being left out of pocket.
Last week, it was reported the government would pay the tax bills of NHS workers caught out by changes to pension contribution limits who have been turning down additional work for fear of running up large tax bills.
The emergency measures were confirmed by NHS chief executive Simon Stevens in a letter to health leaders today (22 November).
Stevens said NHS England had heard “loud and clear” that pension taxation rules were “disadvantaging staff who only want to do the right thing by patients”.
The government consultation on reforms to the NHS Pension Scheme closed at the beginning of this month but NHS chief executive Simon Stevens said, due to the deferral of the budget and calling of an election, a substantive answer on the tapered annual allowance issue was unlikely before the new tax year in April 2020.
Stevens said he believed there was an “urgent operational requirement” to challenge this issue more quickly and, as such, NHS England had decided to take “exceptional action” to address the issues.
He said: “The NHS will ensure clinicians who exceed their NHS pension annual allowance in the financial year are not left out of pocket.
“This scheme will apply to doctors, nurses, allied health professionals and other clinicians in active clinical roles who are members of the NHS pension schemes. It will cover all pension saving in the NHS schemes in 2019/20, but not annual allowance tax charges falling due on pension saving outside the NHS schemes.
NHS England said this will be achieved by:
– Clinicians who as a result of reaching their annual pension allowance are subsequently notified of a tax liability in respect of this year (2019/20) will be able to choose ‘scheme pays’ on their pension form, meaning they don’t have to worry about paying the fee out of their own pocket
– In addition, the NHS will make a contractually binding commitment to pay them a corresponding amount on retirement, ensuring they are fully compensated for the effect of the scheme pays deduction.
Further details about the plan are available at www.england.nhs.uk/pensions and added local employers would incur no extra costs as a result of this provision, which will be funded nationally.
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Written by: Jonathan Stapleton – @jonstapleton