£££s blow if you bust your pension limit

By Edie Bourne

Independent practitioners are being warned to beware of a potential new blow to their pension savings.

Specialist financial advisers have told Independent Practitioner Today that those who owe tax on their pension contributions due to breaching harsh new annual savings limits could face the ‘headache’ of now being unable to ask the NHS Pension Scheme to pay their tax charge – something that was available to doctors in the past.

If doctors breach the annual allowance, which restricts the amount that can be saved into a pension while still receiving tax relief to just £40,000 a year, they will be charged tax on the excess savings at their marginal rate of income tax.

Normally, they will have the option of applying for ‘Scheme Pays’ – requesting that the NHS Pension Scheme pays some or all of the tax bill in exchange for reduced future benefits.