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Nine out of Ten Doctors Who Breached Pension Allowance Are Receiving Professional Help

Nearly three-quarters (73%) of financial advisors have reported to Prudential Research firm that their clients have been impacted by the introduction of the tapered annual allowance. In fact, in the first year it was introduced, reports of annual allowance breaches doubled – that’s a lot of people who could have benefitted from a little help.


This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. 


The tapered annual allowance has been a hot topic for a while in the financial planning world – and for good reason.

Ever since its introduction in April 2016, the tapered annual allowance has been a thorn in the side of the healthcare industry as many doctors and dentists do reach the level of income affected by the tax law.


The reduced annual allowance targets individuals with an adjusted income (all taxable income and pension savings minus certain tax reliefs) of over £150,000. This means that for every £2 over £150,000 an individual makes, their allowance is reduced by £1, with a minimum annual allowance set at £10,000.


However, if your threshold income (income less employer pension contributions) is no more than £110,000, your income will not be subject to the tapered annual allowance.


Is it really that simple?

Sounds simple enough, in theory, but unfortunately, the calculations involved to get the baseline numbers in which the assessment on your allowance is made are quite complicated. So, if you find yourself in need of assistance – which is likely as the calculations for adjusted income and threshold income are highly involved – you should speak to a professional.

Looking specifically at the healthcare sector, the impact has been vast. Doctors and dentists are more likely to be subject to an annual tax charge on contributions and a lifetime allowance tax charge on their benefits and concern over their pensions is increasing.

Nine out of ten doctors who have previously breached the annual allowance have either already sought professional financial advice or plan to do so.

Out of 2,500 doctors involved in the NHS Pension Scheme surveyed by pension provider First Actuarial, 67% reported that they plan to seek professional tax help or will take advice from an advisor.


Seeking out the right professional help

Doctors and dentists might find it difficult to secure an Independent Financial advisor well versed in the topics necessary to help them navigate the potential minefield of tax issues that might be coming their way should they be affected by the tax legislation.

Do not fear. Dental & Medical Financial Services are specialists with knowledge and experience of dealing with NHS pension schemes, the complexities around the threshold and adjusted income, pension, growth values, carry forward and tapering allowance calculations. And as part of our service to clients, we provide carry forward and tapering pension allowance calculations at no extra cost.


Time is running out to use Scheme Pays

The outcomes of these calculations will determine if there is an excess tax charge, and the options available to the member in settling any tax charges, whether that is via the NHS scheme pays route or via self-assessment.

More than 30% of those members facing tax charges arising from 2017/18 elect to use the scheme pays route and the deadline for scheme pays election is July 31st, 2019.

So, don’t delay – get in touch with us today.


Need help to reduce your tax burden?
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.
Call Darren to discuss your options.

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