Negative changes to pensions taxation in the Budget could “derail” the government’s chances of meeting its pledge to cut National Health Service (NHS) waiting lists, the British Medical Association (BMA) warned.

BMA pensions committee chair, Dr Vishal Sharma, wrote to the Chancellor, Rachel Reeves, to argue that “punitive” changes would prevent doctors from taking on additional work, force them to reduce their workload, or in the worst case, leave the NHS entirely.

Given this, the BMA called for assurances from the government; that it will not reduce tax-free pension lump sum allowances, not reintroduce the lifetime allowance, not introduce a flat rate tax relief on pension contributions, and at least index the annual allowance threshold in line with inflation and provide a solution for the poorly designed annual allowance taper.

The BMA said reducing the tax-free pension lump sum allowance would cause a large number of doctors to retire immediately so as not to be hit by “huge” tax bills that they had not planned for.

Indeed, according to NHS data, more than 22 per cent of the consultant workforce in England are between the age of 55-64, many of whom can take early retirement.

It also pointed out that the tapered annual allowance that dictates how much a pension can hypothetically grow before it is subject to more tax could trigger additional charges of up to £22,500 due to just £1 of further earnings.

In his letter to the Chancellor, Sharma said: “The government has committed to bringing down record waiting lists via 40,000 additional appointments a week, but the wrong changes to pension taxation could completely derail these plans before they have even started.

“As we have already highlighted, the tapered annual allowance is already impairing senior doctors’ ability to take on additional work but some of the potential changes that are being suggested could result in doctors retiring on an unprecedented scale. 

“After many years of doctors being left with little option but to take action, such as reducing their workload or leaving the NHS entirely, to mitigate the disproportionate impact of pension tax policy, the last thing that the NHS needs is further detrimental changes.”

Sharma also warned of the unintended consequences of increases to national insurance on the NHS as an employer and whether these are increases to the rate of employers’ national insurance or subjecting employers’ pension contributions to national insurance charges.

He argued the Treasury would need to meet these costs or the NHS, including GP practices, would need to be exempt, suggesting that GP practices are already under “immense financial pressures” and levying further costs could likely cause the closure of even more practices.

Sharma added: “I would again urge you to consider these points, alongside our wider BMA submission to the Budget consultation as you finalise the coming Budget.

“The wrong changes could have irreparable damage for the NHS and the government’s ambitions to improve waiting times for patients.”

---