NHS trusts consider paying staff through LLP to avoid pension tax

A “handful” of NHS trusts have considered paying for services from consultants who have created a limited liability partnership (LLP) to avoid “punitive” tax bills on their pension savings.

According to an NHS Providers report, some trusts believe that this would allow more flexibility for affected NHS staff to manage their pension savings.

However, it admits that it may not a popular proposal at present, due to “compliance considerations around IR35 tax rules”.

The report stated: “A handful of trusts have explored the potential to pay for services from consultants who have formed an LLP.”

It also revealed that some NHS trusts are signposting to alternative pension scheme for staff that have opted out of the NHS Pension Scheme, including the National Employee Savings Trust Scheme (Nest).

NHS Providers’ report added: “Nest is available to staff who do not qualify for membership in the NHS pension scheme but does not provide a similar level of benefit for members.

“From the feedback we’ve received, trusts providing information on Nest are likely to continue considering other interventions in parallel to compensate for this loss in benefit.”

It suggested trusts to seek external legal or other professional guidance when considering alternative schemes.

The report noted that the three most popular approaches being considered by trusts were contribution recycling, increasing non-pensionable pay and reward, and deferred additional leave.

The NHS pension tax crisis has seen longer patient waiting times and calls for the tapered annual allowance, which means that the amount of tax relief available on pension contributions for NHS workers earning over £110,000 per year is being restricted, to be scrapped.

However, the government has repeatedly rebuffed called for its scrapping and has proposed full flexibility over the amount clinicians can put into their pensions as a solution.

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