Doctors who are asking their NHS pension scheme to settle tax charges for 2018-19 are being advised they must apply for Scheme Pays before the 31 March 2021 deadline.
Financial advisers say individuals requesting the Government to pay large tax bills caused by the doctor breaching annual pension savings limits in the subsequent year – 2019-20 – need to make sure they have applied for Scheme Pays before the 31 July deadline.
They must also complete the appropriate application forms.
The Government extended the Scheme Pays 2018-19 deadline to help clinicians working to fight the pandemic. The first extension was from July to October 2020 and then it was delayed again until 31 March this year.
But, unfortunately, there has been no delay to the application deadline for 2019-20, which remains at 31 July 2021.
This is a crucial date, because any clinicians wanting to take up the Government offer to settle Annual Allowance tax charges for one year only must apply for Scheme Pays first.
When individuals elect to use Scheme Pays, the NHS Pension Scheme pays their annual allowance tax bill to HM Revenue and Customs on their behalf, with the member’s benefits in retirement being reduced accordingly.
Patrick Convey, technical director for specialist financial advisers Cavendish Medical, told Independent Practitioner Today: ‘After an arduous year, you may not be fully considering these deadlines, but they are important.
‘You will want to accept the Government’s generous offer of compensation, but to do so, you must elect for Scheme Pays to pay the charge on your behalf.
‘Please do not assume that if you have not received a statement, you do not have a tax charge to pay. The Pensions Agency is not duty bound to send notification to those breaching the “tapered” annual allowance, just the standard allowance.’