What the Budget means for your NHS Pension
16/03/2023. The Chancellor, Jeremy Hunt has announced wholesale changes to pension legislation in the form of an increase in the Annual Allowance and plans to abolish the Lifetime Allowance.
Changes to the Annual Allowance for NHS Doctors
In the past any doctors impacted by the annual allowance needed to declare this on their tax returns each year and then pay over the tax due or ask the NHS pension scheme to pay the tax through a Scheme Pays election. It has now been confirmed that those impacted by the McCloud remedy will not receive an Annual Allowance Pensions Saving Statement in time for accurate completion of their 2022/23 tax returns.
If you are affected by the McCloud remedy [see here] and do have an annual allowance charge for 2022/23 then a separate disclosure regime will apply for 2022-23. Doctors in this category should not make a declaration on their tax return.
When available the NHS Pension Scheme will provide recalculation of the Annual Allowance pension tax charges covering the entire remedy period and also including 2022/23. This will be in the form of a Remedial Pension Savings Statement which should become available in the late summer / autumn of 2024. Those doctors will then need to make a separate declaration of their annual allowance changes from 2015/16 through to 2022/23 using a new HMRC digital system. There will though only be a short timeframe to deal with this.
If you have a tax liability, then this will not need to be paid until 31 January 2025. Scheme Pays Elections deadlines have also been pushed back a year to 31 July 2025.
A few doctors may not be covered by the McCloud remedy depending on when they joined the scheme. These doctors will have to declare their annual allowance tax charge on their tax returns in the normal way. A pension savings statement should continue to be issued to them in the normal way.
Our healthcare team can help you navigate through the complexities of annual allowance tax disclosures and provide advice on the McCloud rectification process. You can contact a member of the healthcare team below.
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