The number of doctors who are using their pension scheme to pay for annual allowance breaches has tripled in 2017-18, according to new figures from the government.
In 2016-17, 1,126 NHS Pension Scheme members used the scheme pays facility but by 2017-18 it was 3,869 members.
Recent rule changes mean scheme pays allows savers to settle annual allowance tax charges of more than £2,000 through the pension fund without needing to find funds upfront.
The rules were relaxed over concerns members affected by the tapered annual allowance changes of 2016 were starting to leave the pension scheme all together.
Before the new regulations were introduced, NHS scheme members could only ask for the tax on any excess over the annual allowance of £40,000 to be paid from their pension.
The total scheme pays charges in 2016-17 amounted to £34.7m.
The latest figures were revealed by Health minister Stephen Hammond in a written response to Parliament, which was published yesterday (May 1).
But the figures for the most recent tax year could be even higher, as NHS scheme members have until July to apply to use the scheme pays facility.
Individuals who pay their tax charge through their pension will see their benefits adjusted at retirement, and will pay interest.
For payments until March 31, 2019, the scheme applies an interest of 2.8 per cent in excess of inflation, which has decreased to 2.4 per cent, plus consumer price index, from April onwards.
Concern about doctors' pensions has increased significantly since the introduction of the tapered annual allowance in 2016.
This gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.
The tapered annual allowance means that for every £2 of income above £150,000 a year, £1 of annual allowance will be lost.
It emerged in December that the number of members leaving the NHS Pension Scheme was five times higher than that seen by other public pension funds.
Sir Steve Webb, former pensions minister and director of policy at Royal London, said the scheme pays option is welcome.
He said: "Just because someone has had a large increase in their pension rights, it doesn’t mean they necessarily have large amounts of liquid cash to pay a tax bill.
"However, doctors need to consider whether the cash flow advantage of using scheme pays is worth the reduction in their final pension at retirement. This issue will be more acute with every passing year as annual allowance limits bite on more people."
Phil Bowler, business development manager at Chase de Vere Medical, said he was not surprised by the increase of scheme pays numbers, due to the effect of the tapered annual allowance.
He said many of those affected by tapering have little choice but to opt for scheme pays to pay their tax bill.
He said: "The concern with scheme pays is that the NHS Pensions Scheme will add interest to any scheme pays balance, and it’s an irrevocable decision, so you can’t pay off the loan prior to your retirement date.