We have heard loud and clear from NHS staff that pensions tax rules are impacting upon staff who want to help their patients by working additional hours.
There is an urgent operational requirement to tackle the problem in the NHS in England. As a result, NHS England and NHS Improvement have decided to take exceptional action:
- Clinicians who are members of the NHS Pension Scheme and who as a result of work undertaken in this tax year (2019/20) face a tax charge in respect of the growth of their NHS pension benefits above their pension savings annual allowance threshold will be able to have this charge paid by the NHS Pension Scheme (by completing and returning a ‘Scheme Pays’ form before 31 July 2021) meaning that they don’t have to worry about paying the charge now out of their own pocket.
- The NHS employer will make a contractually binding commitment to pay them a corresponding amount on retirement, ensuring that they are fully compensated in retirement for the effect of the 2019/20 Scheme Pays deduction on their income from the NHS Pension Scheme in retirement.
This scheme will be implemented with no net cost to trusts or CCGs.
Clinicians are therefore now immediately able to take on additional shifts or sessions without worrying about an annual allowance charge on their pension for 2019/20.
Employers should actively promote this development to affected staff as they plan for extra capacity and staffing over the winter period.
- Pensions tax impacts on NHS general practice – a solution for 2019/20: Letter from Ed Waller and Matthew Style
- Letter from Julian Kelly to NHS Trusts and Foundation Trusts with clinical staff impacted by annual allowance pensions tax during 2019/20
- Template NHS employer letter to in-scope employees
- Letter from Simon Stevens to professional bodies regarding pension tax arrangements in 2019/20
- Letter from Simon Stevens and Amanda Pritchard to local health leaders regarding pension tax arrangements in 2019/20
Frequently asked questions
Please note these will be updated based on feedback from both staff and employers.
- Frequently asked questions for employees. Last updated: 11 March 2020
- Frequently asked questions for employers. Last updated: 11 March 2020
- Frequently asked questions GPS and primary care clinicians. Last updated: 11 March 2020