Rich face cuts to allowances for pensions

By Leslie Berry

Senior doctors could see their pension contributions limited in the wake of last month’s general election result.

The Conservatives’ manifesto declared that those earning over £150,000 will be limited as to how much they can contribute to their retirement pots.

For every £1 of earnings over £150,000, the annual allowance would reduce by 50p so that those earning £210,000 and above would have an allowance of just £10,000 rather than the current £40,000.

Doctors’ advisers are awaiting further details expected to be announced at the ‘emergency’ Budget on 8 July.

But Simon Bruce, managing director of specialist financial planners Cavendish Medical, warned: ‘Consultants should be mindful of any NHS pay rises received through increments, new management positions, clinical excellence awards or by any other means.

‘Excess pension saving could result in an annual allowance tax charge of up to 50% without careful planning.’

The pre-election proposal to cut the Lifetime Allowance – the total amount which can be saved into your pension free of tax – to £1m from April 2016 will now go ahead.

Details of a new corresponding pension protection scheme have not yet been announced by HM Revenue and Customs.

The new Government pledged to introduce a new Family Home Allowance to increase the inheritance tax threshold to £1m for couples where a family home is included.

One welcome outcome of the election for many doctors living in London and the South-east is that the proposed mansion tax is no longer on the cards.