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BMA and Doctors Work Together to Challenge Persisting Pension Problem

One of the unintended consequences of the introduction of the tapered annual allowance is that high-earning dental and medical professionals have been reducing their hours (and some even cutting down their work to part-time) in order to avoid hefty tax bills.

This does not constitute advice and advice should be sought in all instances before acting on it.

Our recent feature on the tapered allowance highlighted these issues and briefly touched on the fact that the British Medical Association (BMA) has taken it upon themselves to go toe-to-toe with the government. They want to stop doctors from limiting their work schedules so they could get back to what they do best — helping and healing their patients.

Potential solution?

A potential solution the BMA has brought to the table is a policy that lets doctors recycle their employer’s pension contributions and the introduction of a country-wide scheme for NHS staff to retain or acquire death in service benefits.

Another aspect of the solution is for the HM Treasury to evaluate the calculations used for annual allowances, especially the tapered annual allowance, to make the determinations fairer. The chairman of the consultant’s committee, Dr. Rob Harwood, also proposed a negotiation to consultant contracts from 2003/2004 that play a part in the drastically high tax bills.

This stems from a real need to get doctors back to the workforce full time. Ever since the introduction of the new tax laws three years ago, both dental and medical professionals have been forced to reduce their hours to circumvent a disproportionate tax bill that their income would produce. With the stability of the NHS already on under threat, this is a high priority for the BMA to get sorted.

And the government response…

There is a real concern about high-earners dipping into their pensions to pay for the bills come tax time, even forcing members to leave the NHS Pension scheme in droves – an exodus more than five times any other public pension has seen.

In response, the Chancellor of the Exchequer Phillip Hammond, has agreed to review the NHS pension scheme to see where flexibility can be added and has been in talks with the Health Secretary to work toward a solution to the situation that his predecessor has caused. He has cautioned that NHS staff would receive the same treatment as the rest of the public and the resolution would need to take the cost of such flexibility into consideration.

The silver lining of these negotiations is that the government is indeed aware of the strain the current tax and pension rules place on doctors. Chairman Harwood insists they are not after special treatment, just fair treatment as these rules presently unfairly punish individuals that have succeeded in their field of profession.

Don’t let tax be your burden

If you’re a high-earning doctor or dentist concerned about your current or upcoming tax bill, get in touch with us today. Our clients receive consultations and calculations that help determine whether or not you’ll be subject to an unexpectedly high tax bill and give guidance on how to deal with the charge.

Are you a high earner and want to protect your pension?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
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Tel: 01403 780 770


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