Pension experts are lobbying the Government to extend the time limit set for NHS pension members affected by McCloud to claim tax rebates amid fears the ‘complexity’ of the process will mean they miss out.
Earlier this month, HMRC relaunched its digital service set up to help people whose tax position may have changed because their pensionable service for the years between 1 April 2015 and 31 March 2022 was rolled back into the 1995/2008 pension ‘legacy’ scheme last October, under the McCloud remedy.
The digital service calculates whether an individual has overpaid – or underpaid – tax charges that apply for the ‘remedy’ years as a result of the annual allowance and lifetime allowance set for pension savings.
Members can apply for a refund or compensation where it’s determined they have paid too much.
However, affected members of the NHS pension scheme, including practice managers, GPs and other staff, have only until 31 January 2025 to complete the tax reassessment process using the digital service, and report tax charges that occurred between 6 April and 2019 and 5 April 2023.
Wealth management company Quilter has said that because of the complexity of the online tool, there’s a risk healthcare workers will fail to meet the deadline and could miss out on critical tax rebates potentially worth thousands of pounds.
Graham Crossley, NHS pension specialist at Quilter, has written to Chancellor Rachel Reeves to request the deadline be extended to 31 January 2027 to give healthcare workers ‘much-needed breathing room’.
In his letter, seen by Management in Practice, Mr Crossley wrote that while the HMRC’s digital service offers significant benefits, it’s unrealistic for many members to navigate in a short period of time due to the complexity and sheer volume of the information involved.
He added: ‘We believe that extending the deadline from January 2025 would provide much-needed breathing room for members and their advisers, ensuring that no one is penalised for being unable to complete the process within such a constrained time frame.’
This would also allow pension scheme members to fully understand the new process, properly assess their savings and avoid being financially disadvantaged by the complexities of the McCloud remedy, particularly since guidance on the issue has been released so late in the day, he further said.
‘We urge HMRC to extend the deadline and allow for a smoother transition, ensuring healthcare workers, can continue focusing on their vital roles,’ Mr Crossley added.
Before being able to use the HMRC digital service or make a request for refunds, NHS pension members will need to have a remediable pensions savings statement, which contains key details about the tax years in the remedy period (1 April 2015 to 31 March 2022).
These are due to be sent out to relevant members by the deadline of 6 October this year.
