NHS consultants, GPs and dentists are to benefit from the reform of the tapering rules surrounding pension tax legislation.
The Chancellor of the Exchequer, Rishi Sunak, has announced in the spring Budget 2020 that the two tapered annual allowance thresholds will each be raised by £90,000 each.
Under new rules, the chancellor claims that 98% of consultants and 96% of GPs will no longer be affected by the tapering rules.
From 6 April 2020, the ‘threshold income’ will be increased to £200,000 (previously £110,000), so individuals with income below this level will not be affected by the tapered annual allowance rules. For individuals with threshold income above £200,000, the annual allowance will only be tapered where their ‘net adjusted income’ exceeds £240,000 (previously £150,000).
The statutory annual allowance remains at £40,000, however, for individuals affected by the tapering rules the annual allowance is reduced by £1 per every £2 their net adjusted income exceeds £240,000.
The minimum level to which the annual allowance can be tapered will reduce from £10,000 to £4,000 from 6 April 2020.
An annual allowance tax charge is payable on the total pension savings if it is in excess of the annual allowance.
NHS Pensions will send pension savings statements to members whose pension growth is more than the standard annual allowance by 6 October each year. However, we recommend that members who are concerned they may be affected by the annual allowance rules to request an on-demand pension savings statement to assess whether a charge is payable.
To request an on-demand pension savings statement, please contact the NHS Pensions Business Services Authority (email: email@example.com
, or telephone: 0300 3301 346).
Finally, it was also announced that the lifetime allowance - the maximum amount someone can accrue in a registered pension scheme - will increase to £1,073,100, in line with CPI for 2020/21.
For further information, or to discuss your position with one of our specialists in the healthcare department, please get in touch