By Edie Bourne
Independent practitioner consultants who have been awarded a new national Clinical Excellence Award (CEA) are being warned they may be shocked to discover the tax implications of their good news.
Financial advisers say that, as a CEA boosts pensionable pay, award- holders may find they are now in a position to breach the yearly pension savings limit known as the Annual Allowance.
The standard rate is currently set at £40,000, but the ‘tapered’ version of the allowance reduces this limit to as low as £4,000 a year for high-earning doctors.
Patrick Convey, technical director at financial planners Cavendish Medical, explained: ‘There have been lots of changes to the CEAs in recent years, which means it can be difficult to keep track of what this means for recipients.
‘The local awards were put on hold during the pandemic and the national awards are now under consultation.
‘Knowing the true value of your award is challenging, but it is important to check what it can mean for your tax position, particularly if you have complex income streams.’
The Department of Health and Social Care has launched a consultation on the current remit of the national CEA scheme with the aim of introducing a revised version from April 2022.
The proposal seeks to ‘broaden access to the scheme, make the application process fairer and more inclusive, and to also change the application process’.
Mr Convey told Independent Practitioner Today: ‘The consultation will change the essence of the awards going forward, but hopefully improve the tax implications, as part of the proposal is to make them non-pensionable.
‘While we await any revisions, you should get your own position checked as soon as possible to avoid or reduce extra tax bills on what should be a reward for your dedication to the profession.’