Head of Healthcare, Kay Botley has analysed some of the most significant announcements on the day of Chancellor Rishi Sunak’s first budget to explain what it means for GP surgeries.
The Chancellor of the Exchequer made a welcome announcement that changes are to be made to the Pension Tax Tapered Annual Allowance.
The pensions annual allowance is the maximum amount of tax-relieved pension savings that can be accrued in a year. For those on the highest incomes, the annual allowance tapers down from £40,000. HM Treasury has reviewed the tapered annual allowance and its impact on the NHS, as well as on public service delivery in general.
To support this, and particularly the NHS, the two tapered annual allowance thresholds will each be raised by £90,000. This means that from 2020-21 the “threshold income” will be £200,000, so individuals with income below this level will not be affected by the tapered annual allowance, and the annual allowance will only begin to taper down for individuals who also have an “adjusted income” above £240,000.
For those on the very highest incomes, the minimum level to which the annual allowance can taper down will reduce from £10,000 to £4,000 from April 2020. This additional reduction will only affect individuals with total income (including pension accrual) over £300,000.
While this will not remove higher earners with growth above £40,000 from having a tax charge, it will mean most doctors will not have their annual allowance tapered down. It will be important that NHS pension records are kept up to date so that higher earning doctors can assess their tax position.
In addition, the Chancellor also announced: