{"id":19213,"date":"2019-05-16T10:50:35","date_gmt":"2019-05-16T10:50:35","guid":{"rendered":"https:\/\/smh.group\/?p=19213"},"modified":"2023-02-15T13:39:44","modified_gmt":"2023-02-15T13:39:44","slug":"doctors-tapering-off-as-pension-tax-rules-bite-2","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/doctors-tapering-off-as-pension-tax-rules-bite-2\/","title":{"rendered":"Doctors tapering off as pension tax rules bite"},"content":{"rendered":"<h3><strong>Measures designed to limit the cost of <a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/retirement-solutions\/\"><span style=\"text-decoration: underline;\">pensions tax relief<\/span><\/a> to the Treasury are having some unwelcome consequences, as some senior doctors have found their incomes disappearing.<\/strong><\/h3>\n<p>Some members of the medical profession have found changes to legislation mean their earnings are getting swallowed up by the tax system. According to a recent <em>Financial Times<\/em> report some NHS consultants are being landed with tax bills of up to \u00a387,000, prompting them to reduce working hours or even take early retirement.<\/p>\n<p>The doctors\u2019 problems primarily stem from the implementation of the pension annual allowance tapering rules.<\/p>\n<p><strong>These have two key trigger points:<\/strong><\/p>\n<ul>\n<li><strong>\u2018Threshold income\u2019 (broadly speaking total income from <em>all <\/em>sources, less personal pension contributions) exceeding \u00a3110,000; and<\/strong><\/li>\n<li><strong>\u2018Adjusted income\u2019 (broadly total income from <em>all <\/em>sources plus employer pension contributions) exceeding \u00a3150,000.<\/strong><\/li>\n<\/ul>\n<p>If both levels are crossed, then the standard annual allowance for <a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/retirement-solutions\/personal-pensions\/\"><span style=\"text-decoration: underline;\"><strong>pension contributions<\/strong><\/span><\/a> of \u00a340,000 is reduced by \u00a31 for each \u00a32 by which \u2018adjusted income\u2019 exceeds \u00a3150,000, subject to a minimum annual allowance of \u00a310,000. The all-or-nothing nature of the triggers can mean that just an extra \u00a31 of earnings brings the taper rules into play. That additional \u00a31 could therefore result in an additional tax bill of much more than \u00a31.<\/p>\n<p>To complicate matters further, \u00a3110,000 sits almost in the middle of the band of income between \u00a3100,000 and \u00a3125,000 at which the personal allowance is tapered away, creating an effective marginal tax rate of up to 60% (61.5% in Scotland). Added to that will usually be 2% national insurance contributions.<\/p>\n<p>The <em>Financial Times<\/em> article said that many doctors had been \u2018surprised\u2019 by their pension tax bills. This implies they had not sought personal financial advice on how the pension taper rules, introduced from April 2016, would affect them.<\/p>\n<p>There are ongoing discussions between the Treasury and the Department for Health and Social Care about the issue, but it seems highly unlikely the former will forgo the revenue generated by the annual allowance rules (over \u00a3560m in 2016\/17). \u00a0In the meantime, the episode serves as a reminder of the importance of regular financial reviews to avoid \u2013 or at least be aware of \u2013 the growing range of tax traps in the UK\u2019s labyrinthine tax legislation.<\/p>\n<p>If you would like to book in a financial review with one of our <a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/\"><span style=\"text-decoration: underline;\"><strong>Chartered Financial Planners<\/strong><\/span><\/a> please contact us on <strong>0114 266 4432<\/strong> or <a href=\"mailto:info@smhca.co.uk\"><span style=\"text-decoration: underline;\"><strong>info@smhca.co.uk<\/strong><\/span><\/a>.<\/p>\n<h6><em>The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>Measures designed to limit the cost of pensions tax relief to the Treasury are having some unwelcome consequences, as some senior doctors have found their incomes disappearing.<\/p>\n","protected":false},"author":4,"featured_media":17177,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[267,271,20,21,245,24,74],"class_list":["post-19213","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-doctors","tag-financial-times","tag-income","tag-income-tax","tag-pension-contributions","tag-pensions","tag-tax-relief"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Doctors tapering off as pension tax rules bite - 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