High earning NHS workers, including GPs and practice manager partners, could face a £33,000 tax bill due to the way inflation is applied to their pension. The Government has rejected a call from the Association of Independent Specialist Medical Accountants (AISMA) to repeat the 2019/20 compensation scheme, which protected NHS staff from tax penalties on their pension growth. Under this scheme, NHS high earners such as GPs and clinicians could work at their maximum capacity and take on extra shifts or sessions without worrying that it would impact on their annual pension allowance.
AISMA has also called for an amendment to the inflation measurement for NHS workers to allow for fairer taxation and better forecasting. It predicted that there would be high pension growth in 2021/22 and 2022/23, followed by negative growth in 2023/24, which would see GPs taxed heavily for two years but receive no relief for the third. AISMA is also warning that GPs and high earners could reduce their hours or even take early retirement to avoid tax penalties.
Without the compensation scheme being replicated, all higher earners in the NHS could be affected. This means that while employed practice managers are not likely to be impacted, managers who are partners in the practice could also face the larger bills. The potential impact will also depend on the amount of pension accrued, meaning younger workers might be less affected.
AISMA has also cautioned that some practices may need to alter the amount they pay their doctors to account for the higher tax bills and has warned that practices that hold back money to help pay doctors’ tax bills need to take action now to prepare for the increase.
Read more about the potential tax impact here: https://bit.ly/3QImxiS