Iniquities of tax demands on NHS pensions debated by MPs

Iniquities of tax demands on NHS pensions debated by MPs

A Westminster Hall debate on NHS pensions was introduced by Sir Robert Syms, Conservative MP for Poole. He said the current policy of reducing tax-free allowances and introducing a taper to the annual amount that can be claimed has devastating implications for the NHS, dental services and many other services in this country unless it is addressed by the Government.

Sir Robert said the policy was having a pernicious effect on the NHS and creating what the British Medical Association has called a “perfect storm”. The lifetime allowance, which is just over £1,055,000, is such that most senior doctors and general practitioners get pulled into additional tax, paid at 55%. “That raises the question of whether they should continue working or retire early; there is a lot of evidence that members of the medical profession are deliberately retiring early because of the implications of working longer”, he said.

Some people could be worse off overall by working an extra shift. He had heard testimony to that effect from many doctors who say they have done additional work and ended up worse off. A survey of GPs found that their average tax bill owing to the tapered allowance was £18,500. “So we really are talking about considerable sums of money being levied on doctors, many of whom do not expect it and suddenly get into arrears”, Sir Robert said. The real problem is that most of the people affected have done years of training and have years of experience, but year on year, they find themselves penalised for working.

He reported that the British Dental Association was saying the same thing: people are retiring early and are more averse to taking on NHS patients.

Many other MPs from both sides of the House raised similar concerns:

https://hansard.parliament.uk/Commons/2019-06-26/debates/2A113069-753F-4F1D-B220-86E936A850D3/NHSPensions

Replying to the debate was the Minister for Health, Stephen Hammond MP, rather than a Treasury Minister, which would have been more appropriate, as many MPs pointed out. He said: “It is clear that retaining and maximising the contribution of our highly-skilled clinical workforce is crucial to the NHS and the long-term plan for the NHS. While any pension tax regime should seek to achieve the fiscal ambition of distributing pension saving incentives fairly, it has to be recognised that, in combination with the fixed structure of the NHS pension scheme, that could produce—listening to the evidence today and the evidence I have directly received—unintended consequences for service capacity and the delivery of patient care. The Government are prepared to change the rules to give clinicians more flexibility.”

The House of Comons Library published a briefing document some years ago on this topic:

https://researchbriefings.files.parliament.uk/documents/SN03281/SN03281.pdf

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