![]() Through the changes announced, the Chancellor hopes to remove a deterrent to experienced and skilled individuals remaining in the workforce and to encourage some of those who may have retired early, to return to work. This was £10,000 in 2016/17 but reduced to £4,0/18 and subsequent years. Money purchase annual allowance (MPAA): Individuals who have already accessed their pension pots are subject to a reduced allowance for pension contributions. Outside the NHS it could mean a lack of flexibility, for example, those with variable incomes who would like to be able to make larger contributions in some years. Due to the operation of the NHS pension scheme, the government noted that this was giving rise to unexpected tax charges for many doctors. ![]() Unsurprisingly, some of those affected by the LTA were opting to retire early, or reduce their hours, to avoid punitive tax charges for exceeding it.Īnnual allowance (AA): This sets an annual limit for tax-relieved pension contributions. Prior to the Budget it was £1,073,100 and was expected to be frozen at that level until April 2026. Lifetime allowance (LTA): This is the limit on total tax relieved pension savings. The main areas of difficulty addressed in the Budget were: However, he also recognised that the issue goes wider than doctors, suggesting that “no one should be pushed out of the workforce for tax reasons”. He cited concerns raised by senior clinicians, who told him that unpredictable pension tax charges are making them leave the NHS. Problems looking for a solutionĪs the Chancellor acknowledged in his Budget speech, some aspects of the taxation of pensions, have been causing problems, particularly in the NHS. Susan Cattell outlines some important pensions tax changes announced by the Chancellor in his Spring Budget. The changes are intended to help retain skilled and experienced individuals in the workforce.The Budget announced the abolition of the lifetime allowance and an increase in annual allowances.Frequent changes to pension allowances in recent years have caused problems.Professional resources Toggle Professional resourcesĬPD - professional development Toggle CPD - professional development Resources for Authorised Training Offices
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