Doctors warned not to miss out on tax cash
Deadline approaching for doctors to apply for Government tax payment
Doctors asking the Government to pay their large tax bills caused by breaching annual pension savings limits in 2019-20 are being warned not to miss the crucial deadline for applications.
Specialist financial planners Cavendish Medical are reminding doctors that they must apply for ‘Scheme Pays’ to settle their tax charge by 31 March 2022.
The annual allowance limits the amount of tax-free pension savings. The standard allowance is £40,000, but this tapers on a sliding scale to as low as £4,000.
The Government agreed to pay the tax charge of clinicians in England and Wales who breached the annual allowance for the tax year of 2019-20 – but only if those affected apply for ‘Scheme Pays’ to claim the compensation.
Patrick Convey, technical director for retirement planning advisers Cavendish Medical, explained: ‘The Scheme Pays deadline normally falls on 31 July each year, but was extended to March this year to support those dealing with the impact of the Covid pandemic.
‘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 that member’s benefits in retirement being reduced accordingly.
‘Time is running out to get this application submitted – and remember that the compensation form must be countersigned by your hospital trust.
‘As the rules surrounding the NHS pension and taxation change again this year, I would urge everyone to get their figures and finances double checked.
‘The much talked about McCloud judgment could mean that the numbers for the last few years need to be changed retrospectively and it would be wise to ensure you start with accurate figures.’
The ‘McCloud’ judgment ruled that moving some doctors to the 2015 NHS Pension Scheme was discriminatory and that compensation would be offered to those affected.