TaxFeb 3 2020

Doctors warned of high tax bills as records out of date

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Doctors warned of high tax bills as records out of date

A Freedom of Information request by Quilter to the NHS Business Services Authority has revealed only 26 per cent of GPs’ pension records for 2017/18 are up to date.

The FOI confirmed that out of 42,451 active practitioner records in England, 11,232 had been updated as of March 31, 2018.

But NHS Business Services Authority stated it could not comment on whether the other 31,219 should have a 2017/18 update or if the record should no longer be active so could not say for definite how many incomplete records there are.

Experts have warned without access to these records, doctors are unaware if they will be hit by a significant tax bill because they have breached their annual allowance.

Also, the deadline to submit a scheme pays form - which allows individuals to pay their tax bill from their pension and not as an upfront cost - passed in July 2018.

However, the NHS is able to consider late applications in these circumstances.

To date the NHS Business Services Authority has received 6,415 scheme pays elections for 2017/18.

Graham Crossley, head of development in the dental and medical division at Quilter Financial Advisers, said: “Annual allowance charges can cost these medical professionals tens of thousands of pounds and if that bill is coming unexpectedly, it will be a substantial shock to the system.

"It is possible for people to use 'scheme pays' to settle these huge bills. 

“However, to use this facility you need to submit a Scheme Pays Election form and the deadline for this option passed on July 31 last year for the 2017/18 tax year and so people who have still to get up to date records may not have elected because they didn’t think they needed to.

"However, the NHS can consider late applications in these types of circumstances, so it’s important to ask the question.”

He added: “These tax bills are complicated and we have found several mistakes in the amount people are being charged so it’s worth speaking to a specialist adviser who can ensure you are paying only as much as you need to and doing it in the best way possible.”

Dr Richard Vautrey, chairman of the British Medical Association’s GP committee, agreed the failure to update pension records meant GPs may be unaware that they have breached their annual tax-free allowance on contributions.

Dr Vautrey said: “It is a disgrace that bureaucratic delays are preventing so many GPs from accessing vital pension statements.

“The current pensions tax system is already far too complicated and opaque, however, without access to these statements family doctors will be completely blind to potentially huge tax charges.

“On top of this, GPs are still being kept in the dark over how NHS England will pay GPs' pension tax charges this winter and the BMA has written to NHSE calling for urgent reassurances on this.

“Ultimately these failures only serve to exacerbate the wider pensions tax fiasco which has resulted in some doctors effectively having to pay to go to work.”

The government in November committed to cover the tax bills that arise from the controversial annual allowance taper for doctors and consultants in England. But the measure will only apply to the 2019/20 tax year.

Introduced in 2016, the taper gradually reduces the annual 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.

It means that for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost.

The taper applies to individuals who have a threshold income – the gross income minus any tax relievable contributions such as pension contributions – above £110,000.

The BMA has been campaigning for the tapered annual allowance to be scrapped as due to this rule, many doctors have been forced to cut their hours, leave the pension scheme or retire early to avoid being caught out by significant tax bills.

Dr Vautrey said: “The BMA continues to call for a long-term solution to the pensions crisis which has scarred the entire health system, but until then, the government must at the very least ensure doctors are able to rely on accurate and up-to-date information regarding their pensions, so that they can get back to focussing on what they do best - caring for patients.”

NHS Business Services Authority declined to comment.

amy.austin@ft.com

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