By Edie Bourne
All independent practitioners are being warned to check their pension status and seek help rather than pay extra tax.
The alert came as new figures revealed the Government increased the tax it collected from savers breaching the lifetime allowance (LTA) by a substantial 80% in the last 12 months.
Revenue from the tax has tripled over the last five years.
In 2015-16, HM Revenue and Customs gained £36m from individuals exceeding the LTA, up from £20m in 2014-15. Back in 2012-13, LTA revenues were just £12m.
The LTA limits the amount which can be paid into a pension while benefiting from tax relief. It now stands at just £1m, down from £1.5m in 2012 and £1.8m in 2011.
Excess pension contributions above the LTA can attract tax charges of up to 55%.
Patrick Convey, technical director at financial planning specialists Cavendish Medical, told Independent Practitioner Today this substantial increase in tax revenue shows that with the severe reductions to the LTA limit in recent years, more professionals are being caught in the net.
‘There are pension protection schemes launched by the Government which can restore previous lifetime allowance limits, but they are often too complicated for many savers to use without proper guidance,’ Mr Convey said.
‘Every middle to senior doctor is likely to breach the lifetime allowance due to the very nature of making pension contributions into the NHS scheme over a number of decades.
‘However, you should not walk blindly into this tax charge. Your tax liabilities could be minimised with careful planning. Seek help without delay.’