NHS pension tax causes doctors to cut hours

Nov 13, 2019
Scott is the partner responsible for looking after the firm’s healthcare and medical sector clients. Scott also specialises in advising small businesses.
NHS Pensions

A report compiled by the Academy of Medical Royal Colleges (AoMRC) has shown that some NHS services are struggling to remain open as doctors cut their hours to avoid being taxed on their pensions. Doctors are often refusing additional work as the taxes on pensions can leave them paying more taxes than what they would earn. This means that medical staff shortages have relied solely on doctors working beyond their contracted hours. This is causing longer patient waiting time for those that need urgent and elective care.

This report has been sent to the chancellor Sajid Javid and the health and social care secretary Matt Hancock. The report summarises all the evidence displaying how doctors, across all medical specialties, have been forced to refuse extra work and cut back on their hours. The report also calls on them to do something to address the pension tax problem that is causing doctors to decline extra work.

The rule change in 2016 has seen some doctors and senior staff receive large unexpected tax bills because of the growth in value of their pension pots, with some NHS staff have reportedly having to re-mortgage their home to pay the tax bill. 75% of emergency medicine doctors have said that patient flow had been affected by the impact of the tax changes made in 2016.

In the letter to Mr Hancock and Mr Javid, AoMRC chair Professor Caroline MacEwen says: ‘It is evident from the findings that, due to severe medical staff shortages, the NHS has become entirely dependent on consultants delivering service provision over and above their existing contracts; this service is being put at risk of the current pension taxation position.

‘Furthermore, our findings indicate that pensions taxation is undermining staff morale, which is detrimental to the recruitment and retention of the medical workforce. Staff shortages in the NHS are a significant concern and we must ensure these pressures do not intensify further as a result of the pension arrangements’

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Scott Sanderson

Partner, Sheffield