Home » Campaigns » BUDGET UPDATE: Chancellor announces pensions tax changes in big step forward for HCSA members
BUDGET UPDATE: Chancellor announces pensions tax changes in big step forward for HCSA members

Hospital consultants and specialists have achieved a big step forward in our campaign to press Chancellor Jeremy Hunt to fix the “national scandal” of pensions tax driving senior doctors from the NHS.

The changes follow years of HCSA campaigning on the issue.

  • Reforms to pension taxation announced in the Budget include:
  • Abolition of lifetime allowance
  • An increase in the annual allowance to £60,000
  • The ability to offset negative growth in one NHS pension scheme against positive growth in the other

Taken together they represent a big step toward in ending the uncertainty which has seen thousands of senior doctors retire early from the NHS or cut hours due to the fear of falling foul of tax laws simply for working in the health service.

HCSA’s pensions committee chair Dr Sarah Tennant said the changes would make an impact, although she cautioned that there was still a risk that AA, which is one of the biggest traps for experienced hospital doctors, would be a problem. The pensions taper remains in place and will still impact on doctors.

HCSA wrote to the Chancellor in November urging a higher LTA and the abolition of AA as called for by the Office of Tax Simplification and backed by NHS employers. In a recent consultation on the NHS Pension scheme HCSA also urged the change announced today to allow members to offset negative growth against positive.

HCSA pensions committee chair Dr Sarah Tennant said:

“We have said all along that the key to keeping senior doctors in the NHS is to put an end to uncertainty and the prospect of bills landing on their doormat just for working in the NHS. It is this which is the biggest driver of individuals cutting hours and responsibility or leaving altogether.

“The abolition of Lifetime Allowance will undoubtedly make a big difference when it comes to encouraging doctors to stay in work. We applaud this change, which prevents the unfair double taxation of doctors in the defined benefit NHS scheme.

“Some concern remains that the increase in Annual Allowance to £60,000 may still land senior doctors with unexpected tax bills, but the decision to allow negative pensions growth in one scheme to be offset against positive in another will help to alleviate the issue. The fact the taper still remains will also undoubtedly cause problems and we shall continue campaign for reform.

“This has been a good day for the Chancellor on NHS pensions, and a good day for HCSA consultants and specialists who have joined us in campaigning for substantial change.”

Budget highlights

  • Lifetime Allowance to be removed from April
  • Annual Allowance threshold up to £60,000
  • Negative growth will in future be able to be used to offset positive growth
  • Taper remains