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8 July 2015
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From April 2016, the amount that top earners can pay into pensions will be reduced, which a leading accountant said could mean that many doctors go into early retirement.
Those with an income above £110,000 will have their annual allowance reduced from £40,000, gradually decreasing to £10,000.
Nick Stevenson, Head of the Healthcare Sector at MHA, the national association of accountancy and business advisory firms, said: “Many healthcare professionals will be affected by this change, increasing their personal tax liability and adding further complications to an area that is already confusing, and potentially making many doctors consider early retirement from the NHS scheme.
He also spoke of the dividend tax changes, which will also begin in April 2016.
Stevenson said: “Fundamental changes will be made to the way dividends are taxed from April 2016, which will affect many business owners who draw their income by way of dividend rather than salary. Many healthcare professionals run a business through a limited company vehicle and this change will directly impact upon the tax liability of these individuals, by way of higher personal tax charges on extraction of profit.
He said that there will be a slight tax saving to offset this impact with the reduction in the corporation tax rate; however, this is not starting until a year later, from April 2017.
“Doctors should seek early advice over this impact in order to understand the implications,” he said.