It’s the time of year when those little letters from NHS pensions are landing on doctors’ doormats. If you receive a letter, it probably says you exceeded the pensions annual allowance in the 2018/19 tax year, and it’s an indication that you might have tax to declare.
Unless you are one of the rare breed of doctors who really understands this stuff, seeking help is probably the right thing to do. Medics’ Money can match you to a specialist medical accountants and financial advisers who have proven expertise with the NHS pension scheme.
The reaction on first receiving an annual allowance letter is usually one of confusion. What does this mean? Why me!? Helping you to understand how the NHS pension schemes work and what has caused you to receive a letter is straightforward for both accountants and financial advisers – if they have the right medical experience. They will ask you to gather together some important pieces of paperwork before your meeting or discussion. Each will then talk you through the pension benefits you have built up, how much you add each year, what the pension tax rules are and why this has resulted in an annual allowance statement being sent. By the end of that discussion you should have a good understanding of your pension situation, and you should understand if tax is due (and roughly how much). But what next?
If your primary concern is calculating, declaring and paying the tax due, then you need an accountant. An accountant can precisely calculate what is due and they can submit tax returns on your behalf. They may also be able to predict what tax will be due next year and in future years so you can make provision for it. With a specialist medical accountant acting for you you’ll be certain that you are adhering to the rules and you won’t need to commit time to understanding the ever-changing pension landscape. The only painful bit left, is paying the tax!
If you want to know what you should do, whether you should make changes within the scheme or otherwise, then you need a financial adviser. Tax is only one aspect of an individual’s financial position; your income needs, your financial commitments, your plans and objectives will all be just as important when it comes to making a decision. A good financial adviser will take all this into account when creating a personalised plan, and they will explain why it is right for you. With new pension scheme options proposed for next year, advice could become more important than ever.
Written by Guy Roper, Chartered Financial Planner and medical specialist IFA from Sunrise Independent Financial Advisers.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. Sunrise Independent Financial advisors is authorised and regulated by the Financial Conduct Authority.