Government extends deadline for GP pension tax bills

Government extends deadline for GP pension tax bills
Government extends deadline for GP pension tax bills

The government will extend the ‘scheme pays’ deadline for GPs to be able to claim support from the NHS pension scheme with their pension taxes until March next year.

Under the ‘scheme payer’ mechanism, GPs can request that tax charges on annual allowances be deferred until retirement and withdrawn from their pension fund rather than having to pay them upfront.

The deadline to apply for the aid for the 2020/21 tax year was July 31, 2022.

But in an email to NHS pensions specialist at Quilter Graham Crossley, seen by Pulse, the Department of Health and Social Care (DHSC) revealed that this will be extended until March 31, 2023.

He said: “The department has listened to concerns from stakeholders that an extension of the deadline for the voluntary scheme for payments for the 2020/21 tax year is needed. The previous deadline for this was July 31, 2022.

“The Department can confirm that NHSBSA is making arrangements to extend this deadline to March 31, 2023.”

He added that further information “will be made available on their website in due course”.

The move follows calls from Quilter to extend the annual deadline again this year, after it was extended last year and the year before due to the impact of the Covid pandemic.

Mr Crossley said that although the decision was “reasonable and pragmatic”, GPs “urgently need solutions to the punitive tax rules which are causing labor retention problems”.

He said: “The standard £40,000 annual allowance is still a problem for many healthcare workers and these problems are not limited to the highest earners.

“While the earnings scheme allows savers to pay annual tax charges through their NHS pension without needing to come up with money up front, it is no solution for an unfair tax system that no longer works. as expected.”

Mr Crossley reiterated calls for reform of the way annual allowance calculations assess “short-term” inflation, saying it “is not fit for purpose” and that GPs “are prepare for enticing tax bills that land on their doorstep.”

And he said that in the longer term there must be “a workable solution for older healthcare workers so that they are not penalized for working in the NHS” but are taxed “fairly”.

He added: “There have been welcome whispers that if Liz Truss is to become the next Prime Minister one of her first priorities will be to ‘settle’ the issues around doctors’ pensions, however, precautions will be needed. to ensure that all solutions are truly fit for purpose.

“As is always the case, the devil is in the details and any plan must ensure that it does not produce unintended consequences that further muddy the waters of what is an incredibly complicated system.”

What is the “plan pays”?

Under the current NHS pension scheme, the highest paid GPs pay at least 14.5% in contributions, but a declining annual allowance limits the amount of money that can be poured into the pension pot each year without making face significant tax penalties.

Pension taxation rules, in particular around annual and lifetime allowances, push general practitioners to reduce their hours or retire early to avoid heavy tax burdens.

The “payroll plan” arrangement allows tax charges to be deferred on annual allowances until retirement by settling the charges for the previous tax year through the pension plan.

Under a special scheme for the 2019/20 tax year, GPs facing a tax burden above the annual pension savings allowance threshold could see this burden paid by the pension scheme from the NHS via the pay scheme, then be offset the effect of the deduction on their pension income when they retire.

The government made the compensation available in 2019 to allow clinicians to work more shifts or sessions without worrying about an annual allowance on their pensions.

However, the The Treasury recently rejected calls from specialist GP accountants and the BMA to repeat the 2019/20 compensation scheme to protect GPs from ‘huge’ tax bills caused by inflation.

It comes as the government launched a consultation on extending changes to the NHS pension scheme that have made it easier for retired GPs to return to work during the pandemic.

And it has been reported that the Prime Minister’s favorite Liz Truss has pledged to ease tax burdens on GP pensions in a bid to stem the exodus of doctors from the NHS.

Meanwhile, the BMA announced in July that it had won a judicial review of the government’s “unlawful” handling of NHS pensions.

. government extends date deadline bills tax on pensions doctors general practitioners

. Government extends deadline pension tax bills

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