Pension tax changes could result in higher bills for GPs, consultants and senior NHS staff, experts have warned.
From April this year, pension taxation limits will be reduced. This means staff retiring after 5 April, or receiving a promotion, could breach the lifetime or annual allowance for tax efficient pension savings.
The lifetime allowance (LTA) is the maximum amount of pension savings that have the benefit of tax relief. From 6 April 2014, this will be reduced from £1.5 million to £1.25 million.
And the annual allowance – the limit on tax efficient savings that can be make in one year – will be reduced from £50,000 to £40,000.
Senior NHS workers earning over £100,000 a year may breach the new annual allowance when it reduces in April. Even those earning £45,000 a year could breach the annual allowance if they have over 20 years’ service and receives a significant promotion.
Doctors and senior NHS executives earnings from £94,000 who retire after a full career in the NHS from April 2014 may breach the lifetime allowance for the first time when it reduces from £1.5m to £1.25m.
The warning comes from My Civil Service Pension (MyCSP), UK central government’s first mutual joint venture and administrator of the civil service pension scheme.
The organisation is advising health workers to discuss the changes with their employers to understand how they might be affected, the options available to them and the action they need to take.
Virginia Burke, business development director at MyCSP said: “It is important that scheme members are aware of the upcoming changes in order to make informed choices about their options and ensure the correct HMRC reporting procedures are followed.”