A claims management company has teamed up with an advice firm to seek out NHS Pension Scheme members who are concerned about annual allowance breaches.
Claims company Greg Vaughan Financial Services, which trades as PensionClaims.com and is headed by a former adviser, has partnered with JFD Financial Planning, an appointed representative of Quilter Financial Services, to offer a free pensions consultation to NHS workers.
The CMC is looking to determine whether members have exceeded the annual allowance and if they are able to reclaim any tax charges.
A spokesperson from Quilter Financial Planning told FTAdviser: “Quilter Financial Planning considers the involvement of its network firms with CMCs on a case-by-case basis and questions when a CMC is set up as an introducer into one of our firms.
“We are looking into this specific arrangement.”
The annual allowance, the maximum amount an individual is able to save into their pension schemes each year with the benefit of tax relief, stands at £40,000 for the 2020-21 tax year.
In communications to clients, Greg Vaughan FS said the calculations behind the annual allowance can be difficult, which is why it decided to launch these free consultations.
It stated: “In order to calculate whether the annual allowance has been breached, you will need to know your pension input amount from all schemes: the NHS 1995 scheme, the 2015 scheme or both, plus private pensions.
“Calculating these figures is far from straightforward, so to help NHS staff determine if they have exceeded the annual allowance, Greg Vaughan Financial Services have teamed up with JFD Financial Planning to offer a free consultation.”
The CMC added that for those who have already paid a penalty tax charge for the 2018-19 tax year or later, it “should be possible to reclaim the amount paid from HMRC and have the NHS Pensions Scheme pay it instead”.
This method, known as 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.
Employees must notify NHS Pensions of their intention to use scheme pays before the relevant annual deadline for each tax year, for 2020-21 this is July 31, 2022.
In August the NHS Business Services Authority extended the voluntary scheme pays deadline for the tax year 2018-19 until March 31, 2021 in order to support frontline workers who may struggle to pay an unexpected tax bill during the Covid pandemic.
The taper issue
The tapered annual allowance has also caused a raft of issues for senior clinicians.
The taper 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 rules have forced senior clinicians and other high earning public sector workers to either leave their pension scheme, cut down on their working hours or retire early to avoid punitive tax bills.
While the Budget in March lifted the ‘adjusted income’ and ‘threshold income’ levels under the tapered annual allowance by £90,000 for the 2020-21 tax year, there are still doctors affected by the charge, including those who are taking on extra shifts due to the pandemic.
amy.austin@ft.com
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