To ask the Chancellor of the Exchequer, with reference to the Answer of 31 May 2022 to Question 8221 on Tax Allowances: Health Professions, what assessment he has made of the potential for inflationary pressures to (a) drive pension growth and (b) cause medics to inadvertently exceed annual allowances and incur associated tax bills.
The Government is committed to ensuring that hard-working NHS staff do not find themselves reducing their work commitments due to the interaction between their pay, their pension, and the relevant tax regime.
99 per cent of pension savers make annual contributions below £40,000, the level of standard annual allowance which has applied from 2014/15. Individuals who breach the annual allowance on tax-relieved pension savings can also use an option called ‘scheme pays’, under which they can require their pension scheme to pay their annual allowance tax charge now (in return for an actuarially fair reduction in their pension), provided that the annual allowance charge is at least £2,000 and they have exceeded the annual allowance of £40,000. In England and Wales, the NHS Pension Scheme goes further, allowing Scheme Pays to be used on any annual allowance charges relating to accrual in that scheme.