Thousands of NHS workers breach annual pensions allowance


At least 34% of people who exceeded the £40,000 annual pension allowance in 2019/20 were members of the NHS Pension Scheme, according to data sourced from HMRC sourced by Quilter.

The wealth manager said that analysis of HMRC figures revealed that 42,350 taxpayers reported pension contributions exceeding their annual allowance through Self-Assessment. 

Many were GPs.

The total value of contributions reported as exceeding the allowance was £949m in tax year 2019/20, up from £819m in 2018/19.

According to a Freedom of Information request to the NHS Business Services Authority (NHSBSA) by Quilter, 14,242 NHS pension scheme members used the NHS ‘scheme pays’ facility for a 2019/20 annual allowance liability. This figure includes those subject to tapered annual allowance.

The figures also reveal that of the 15,583 members who exceeded the standard annual allowance through their NHS pension scheme, 10,776 have not used the scheme pays facility. The scheme pays facility allows savers to settle annual allowance tax charges through their pension scheme without needing to find cash upfront.

However, some of those 10,776 staff will still have carry forward available meaning they can carry forward any unused allowances from the previous three tax years to boost the amount they can put into their pension and therefore not breach the allowance.

The NHSBSA data also revealed that 18,631 GPs still had not received their 2019/20 annual allowance statement by 31 January 2022 meaning that the final proportion of NHS members exceeding the annual allowance could be higher.

In February 2022, NHS England and NHS Improvement said they will accept late applications from GPs for annual allowance compensation policy claim form. The original deadline for GPs to file their annual allowance paperwork was 11 February 2022 but 18,631 GPs had not yet received a pension savings statement for 2019/20 at the time the data was collected at the end of January 2022. 

Graham Crossley, NHS pension specialist adviser at Quilter, said: “These figures illustrate how badly medical professionals are targeted by Annual Allowance tax rules compared to other professions. The fact that we know that NHS scheme members represent at least 34% of all people that breached the annual allowance is bad enough, but in reality that figure could be closing in on 40% to 50% of the total. 

“The NHS has played a critical role for the nation over the past two years and these figures truly highlight why there needs to be swift changes to these unfair rules, or you risk doctors leaving the NHS in their droves.”

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