NHS Scheme Pays – a recap
From April 2016 the annual allowance (AA) was tapered for individuals whose ‘adjusted income’ was over £150,000 at a rate of £1 for every £2 over the threshold to a minimum AA of £10,000. The tapered annual allowance (TAA) calculation only applied if your ‘Threshold Income’ was over £110,000.
Rishi Sunak’s announced in his first Budget a rise of £90,000 before anyone was to be affected by the TAA starting from the 2020/21 tax year. Therefore, the TAA will only be an issue for those earning in excess of £200,000 per annum which should remove most individuals and allow the NHS to function properly without fear of the recent penal tax charges.
The AA will only begin to taper down for those with an adjusted income over £240,000 on the same £1 for every £2 basis however the TAA will now reduce to a minimum of £4,000 so anyone with an adjusted income over £312,000 will only have this AA available.
Since 2016/17 Scheme Pays has been utilised by many Medics who do not have the capital set aside to cover additional tax charges that have been triggered – and made worse for those members that have transitioned into the new 2015 scheme.
The deadline for Scheme Pays is 31st July in the year following the tax year of the AA charge. For the 2018/19 year this has now been extended to 31st March 2021 so anyone that feels they may have triggered a tax charge still have time to have this reviewed and checked. For the 2019/20 tax year the deadline currently remains 31st July 2021.
If you have not received an annual allowance pension savings statement and believe your earnings may have resulted in an excess since 2016/17, you should contact the NHS pensions agency (0300 330 1346) and request for one to be produced and issued.
Once you have the statement we would be more than happy to check the figures to see whether a full review is required so please contact Tom Bate at Tempus Wealth by clicking here
NOTE: Scheme Pays is effectively a loan against your pension scheme and is repaid at retirement by way of a reduction in your annual pension. This may not be the most suitable course of action and seeking independent advice is essential.
This does not constitute advice and advice should be sought in all instances before acting on it. Tempus Wealth are authorised and regulated by the Financial Conduct Authority.