NHS workers make up a third of annual allowance breaches

NHS workers make up a third of annual allowance breaches

At least 34 per cent of all people who exceeded the annual allowance in 2019/20 were members of the NHS pension scheme.

Recent data from HM Revenue and Customs and figures gathered by Quilter found that 42,350 taxpayers reported pension contributions exceeding their annual allowance through self-assessment. 

The total value of contributions reported as exceeding the annual allowance was £949mn in tax year 2019/20 which has increased from £819mn in 2018/19.

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According to a Freedom of Information request to the NHS Business Services Authority (NHSBSA) by the firm, 14,242 NHS pension scheme members used the NHS scheme pays facility in respect of a 2019/20 annual allowance liability. 

This figure includes those subject to the tapered annual allowance.

Scheme pays allows savers to settle annual allowance tax charges through their pension scheme without needing to find cash upfront.

The FOI found that of the 15,583 members, who exceeded the standard annual allowance through their NHS pension scheme, 10,776 have not used the scheme pays facility. 

However, some of those 10,776 staff will have the ability to carry forward any unused allowances from the previous three tax years to boost the amount they can put into their pension and therefore not breach the allowance.

The NHSBSA data also revealed that 18,631 GPs still had not received their 2019/20 annual allowance statement on January 31, 2022 meaning that the final proportion of NHS members exceeding the allowance could be higher.

Graham Crossley, NHS pension specialist adviser at Quilter, said: “These figures illustrate how badly medical professionals are targeted by annual allowance tax rules compared to other professions. 

“The fact that we know that NHS scheme members represent at least 34 per cent of all people that breached the annual allowance is bad enough, but in reality that figure could be closing in on 40 per cent to 50 per cent of the total.”

Crossley added: “The NHS has played a critical role for the nation over the past two years and these figures truly highlight why there needs to be swift changes to these unfair rules, or you risk doctors leaving the NHS in their droves.”

Source: Quilter FOI to NHS Business Services Authority

In February, NHS staff were given the option to make a late application to have their scheme cover annual allowance tax bills after the industry warned many GPs would not have completed paperwork in time.

Following industry pressure from the likes of Quilter, NHS England and NHS Improvement said it would accept late applications for its annual allowance compensation policy claim form.

The original deadline for GPs to file their annual allowance paperwork was February 11, 2022 but 18,631 GPs had not yet received a pension savings statement for 2019/20 at the time the data was collected at the end of January 2022.

All NHS pension members will now be able to submit their annual allowance compensation application form six months after receiving their 2019/20 pension savings statement. However, Quilter said many doctors will still fall through the cracks and the deadline should be made open-ended to avoid doctors suffering punitive tax charges.