My colleague Tori Ferguson has written a series of detailed blogs about pension charge taxation – but will the charge affect you?
Going forward restrictions of allowances (or annual allowance tapering) will only apply to GP locums and salaried GPs with total income over £200k. So, charges are perhaps less likely than they used to be for many individuals.
That being said, and tapering aside, it is easier than you might think to exceed the ‘standard’ £40k annual allowance limit:
- We’ve seen GPs caught out where parents have been contributing to a personal pension for their child without considering the interaction or knock-on effect where that child is also a member of the NHS pension scheme too.
- Paying for added years, additional pension, additional voluntary contributions (AVC) (freestanding or otherwise) or payments into a SIPP or personal pension (as mentioned above) can also increase pension input/growth, to the extent that the annual allowance is exceeded – particularly when taken in conjunction with ‘normal’ NHS Pension membership.
- For older GPs with ‘flexi-access draw-down’ pensions, there may be an interaction between a very heavily reduced ‘money purchase annual allowance’ and the ‘alternative annual allowance’ for those still accruing NHS pension benefits.