Pensions tax raid will ‘irreparably damage’ NHS, doctors warn


The NHS will be “irreparably damaged” by the Government’s tax raid on pensions, doctors have warned. 

Chancellor Jeremy Hunt is expected to announce an extra two year freeze on the lifetime allowance on pension savings in the Autumn Statement this week. 

The extended freeze, which will fix the cap at £1.073m until 2028, is expected to wreak havoc on the NHS as senior doctors refuse extra work and retire early to avoid hefty tax bills. 

The British Medical Association, the trade body representing doctors, has warned that the NHS will be “irreparably damaged” without decisive action on pension reform. 

Dr Vishal Sharma, chair of the BMA pensions committee, wrote in a letter to the Chancellor that the frozen lifetime and annual allowances was the “main driver for doctors and other senior NHS staff reducing their hours or taking early retirement”. 

Dr Sharma said: “Extending the freeze on the lifetime allowance would further worsen the situation, driving even more senior doctors to retire early.”

“I am fearful that without decisive action, the NHS will be irreparably damaged.” 

If inflation remains above 5pc until 2027, then all full time consultants and GPs will hit the threshold in their early 50s, the BMA has estimated.

Fears are growing that a wave of healthcare workers will exit the profession to avoid tax charges that can quickly run into thousands of pounds. Almost half of hospital consultants are planning to leave the NHS within the next year, according to BMA research. 

Top doctors will also face five-figure tax bills next year, as gold-plated NHS pensions will surge in value in line with September’s rate of inflation at 10.1pc. This will put thousands of high earners at risk of breaching their annual tax-free savings allowance.

The growing exodus of senior doctors comes as NHS waiting lists stand at more than seven million and there are fear that the queue could keep growing until 2025. 

Mr Hunt acknowledged the need for reform of the NHS pension system during his party leadership campaign in the summer. He wrote in The Telegraph: “We should grant an immediate exemption for doctors to public sector pension rules that force them to retire in their 50s.” 

When the lifetime allowance was introduced in 2006, the cap was £1.5m. It was raised to £1.8m in 2010 but was then repeatedly cut, eventually down to £1m in 2016. It then increased with inflation until 2021 when it was frozen by then Chancellor Rishi Sunak at its current level for five years. 

In total, the now seven-year freeze on the lifetime allowance would raise £1.4bn for the Government. 

A Treasury spokesman said: “We do not comment on speculation around tax changes outside of fiscal events.”



Read More: Pensions tax raid will ‘irreparably damage’ NHS, doctors warn

2022-11-14 04:08:00

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