Doctors are given more time to sort pension tax
By Robin Stride
Doctors who are asking the Government to pay their large tax bills caused by breaching annual pension savings limits in 2019-20 have been given more time to apply for help through the voluntary Scheme Pays system.
They have now been granted an extra eight months to sort out their applications.
The deadline, normally falling every 31 July, has been extended to 31 March 2022 to support those who are dealing with the impact of the Covid-19 pandemic.
When individuals elect to use Scheme Pays, the NHS Pension Scheme pays their annual allowance tax bill to HM Revenue and Customs (HMRC) on their behalf, with that member’s benefits in retirement being reduced accordingly.
The Government had previously agreed to pay the tax charge of clinicians in England and Wales who breached the annual allowance pensions savings limits for 2019-20 only – but those affected must apply for Scheme Pays to claim this offer.
Patrick Convey, technical director of specialist financial planners Cavendish Medical, explained: ‘This deadline extension is good news if you are struggling to complete the necessary forms in time.
‘However, one confusing element is that you will have already completed your 2019-20 tax return earlier this year. Hopefully, you told HMRC then that you intend to apply for Scheme Pays to settle any annual allowance charge and not opted to pay via self-assessment.
‘And even with the extension in place, I would encourage those that can to complete the forms as soon as possible so you do not forget to apply or run out of time.
‘It is also wise to get your figures double-checked – the McCloud judgment could mean that the numbers for the last few years need to be changed retrospectively.’
This judgment ruled that doctors affected by the deemed ‘age discrimination’ of moving to the 2015 NHS Pension Scheme have the right to make a ‘deferred choice’ of which remedy benefits to take.
Consequently, they can decide at the time of their retirement whether to accept the pension benefits from their previous 1995/2008 pension scheme or those from the 2015 scheme for the remedy period, which is from 1 April 2015 to 31 March 2022.
Mr Convey added: ‘Note that even when there is some good news for NHS scheme members like this Scheme Pays deadline extension, every change to the rules and regulations has the potential to make the pension plan, and its calculations, ever more complex.
‘The best way to deal with this is to plan as far ahead as you can and seek help to check you are still on the right track when things do change.’