Over a third of those exceeding AA are members of NHS Pension Scheme

At least 34 per cent all people who exceeded the annual allowance (AA) in 2019/2020 were members of the NHS Pension Scheme, according to analysis by Quilter.

Data from HMRC recently revealed that that 42,350 taxpayers reported pension contributions exceeding their AA through self-assessment, with the total value of contributions reported as exceeding the AA reaching £949m in tax year 2019/20, up from £819m in 2018/19.

A Freedom of Information request to the NHS Business Services Authority (BSA) also revealed that 14,242 NHS pension scheme members used the NHS scheme pays facility in respect of a 2019/20 AA liability.

However, of the 15,583 members who exceeded the standard AA through their NHS pension, 10,776 had not used the scheme pays facility.

In addition to this, the NHS BSA data revealed that 18,631 GPs still had not received their 2019/20 annual allowance statement yet on 31 January 2022, with Quilter warning that the final proportion of NHS members exceeding the AA could be higher as a result.

Quilter also noted, however, that some of those 10,776 staff will 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.

NHS England and NHS Improvement previously confirmed that it would accept late applications from GPs for its annual allowance compensation policy claim form, in light of concerns that GPs would not have the appropriate pension savings information in time for the original deadline.

Despite these changes, Quilter argued that it looks like many doctors will still fall through the cracks, suggesting that the deadline should be made open-ended to avoid doctors suffering punitive tax charges.

Quilter NHS pension specialist, Graham Crossley, commented: “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 per cent of all people that breached the annual allowance is bad enough, but in reality that figure could be closing in on 40 per cent to 50 per cent 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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