Govt extends annual allowance deadline for NHS workers

The government has extended the NHS scheme pays deadline by three months to stop workers being hit by significant unexpected tax bills as a result of the tapered annual allowance.

The Department of Health and Social Care (DHSC) confirmed the voluntary scheme pays deadline for the tax year 2018/19 has been extended until October 31, 2020 in order to support frontline workers who may struggle to pay an unexpected tax bill during this time.

The deadline is the date by which GPs who want to have an annual allowance pension tax liability settled by way of scheme pays must have submitted their election form.

Scheme pays allows savers to settle charges of more than ￡2,000 through the pension fund without needing to find funds upfront.

A DHSC spokesperson said: “We want to ensure every member of our NHS frontline gets the support they need during this unprecedented time.

“The deadline of NHS scheme pays has been extended until 31 October 2020 and will be reviewed again at the end of July.”

The taper issue

The tapered annual allowance gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.

The rules have forced senior clinicians and other high earning public sector workers to either leave their pension scheme, cut down on their working hours or retire early to avoid punitive tax bills.

While the Budget in March lifted the ‘adjusted income’ and ‘threshold income’ levels under the tapered annual allowance by ￡90,000 for the 2020/21 tax year, there is still a legacy of annual allowance issues for many doctors.

Doctors who are taking on extra shifts due to the current pandemic are at risk of being hit with large tax bills because of continuing issues with this charge.