Frequently asked questions for employers

Pensions tax is a complex subject and the information set out in this document is intended to provide a concise summary of the new NHS Annual Allowance Policy 2019/20. If you have any questions about the annual allowance or how this scheme might affect your personal financial position you should consider advice available on HMRC, BSA and NHS Employers websites, and take independent financial advice.

These questions will be updated based on feedback from both staff and employers.

Last updated: 11 March 2020

Yes. The benefits for eligible clinicians from this commitment will be funded centrally, and will be administered centrally by NHS Business Services Authority, however there will be some initial administrative costs for individual employers. The NHS Business Services Authority already administer the NHS Pension Scheme, and payroll for some organisations.

For NHS Trusts and GP practices / holders of contracts to provide front line services the Secretary of State stands behind this commitment (insert link to statement)

For Higher Education Institutions (“HEIs”) who are the substantive employer of “clinical academics” who meet the eligibility criteria, the promise to make the payments under the NHSE commitment will be made by the HEI, but on the condition that the Trusts (who hold the honorary contracts with the individuals) will guarantee to meet the costs of the payments under the policy.  The legal framework for this is being established and is ultimately backed by the Secretary of State commitment to Trusts (see above).

For Independent Sector providers, the promise to make the payments under the NHSE policy will be made by the independent providers, but on the condition that NHSE will guarantee to meet the costs of the payments under the policy under the existing contracts to provide services.  This will be ultimately backed up by the Secretary of State (see above).

Yes – employers will need to confirm the eligibility of clinicians based on their clinical registrations as described in the eligibility criteria set out earlier in the FAQ.

We will have a process to guard against fraud/active misstatement. Employers must demonstrate that the appropriate registrations are in place and up-to-date, and that they have had a proper process for certifying active service building on existing HR and clinical governance processes.


Trusts, Higher Education Institutions and GP practices have been sent letters that can be provided to potentially eligible individuals aware of the Policy, together with the eligibility requirements.

We will keep the FAQs up to date and provided additional communications for employers to use, should NHSEI believe that they are required.


NHS England and NHS Improvement will provide employers who have eligible clinicians with financial support to ensure they do not bear the costs of making payments to clinicians who are eligible to receive them under the 2019/20 commitment. The delivery of the 2019/20 commitment will be managed by the NHS Business Services Authority who are also responsible for running the NHS Pension Scheme.

There will be some short term local administrative costs for employers such as HR time.


We expect that NHS Trusts will need to create a provision broadly equal to the tax charge owed by clinicians who want to take advantage of the 2019/20 Commitment. This will be offset by the commitment from NHS England and the Government to fund the payments to clinicians as and when they arise. The provision and offsetting asset will initially increase year on year in line with the pension scheme growth, and be released as commitments are met, i.e. as eligible members retire under the rules of the NHS Pension Scheme.

Further guidance will be issued to assist Trusts who need to calculate the required provision and to manage the ongoing liability.

The accounting guidance will also be made available to other organisations who may need to make a provision for the costs of the commitment in their accounts.

Local governance and Equality Impact Assessments (“EIAs”)

Trusts will have to sign off the Policy locally from an equalities and governance perspective. As such, Trusts will be required to perform their own Equality Impact Assessments in respect of this Policy. The Department of Health and Social Care EIA assessment which was published in relation to future proposed pension flexibilities covers the key areas that Trusts will need to incorporate in their own EIA.

NHSEI are developing the Policy in line with its own governance requirements. As such, policy information and its own EIAs will be available publicly.

NHS England and NHS Improvement has drafted a letter for Trusts to send to individuals in respect of the Policy.

The letter should therefore be sent to all staff who are potentially eligible and have the appropriate professional registration.

A separate letter has been prepared for clinical academics to be sent by the Higher Education Institution with whom they have a contractual relationship.

The initial communication letter should be sent to anyone who a Trusts believes is potentially eligible.

If a non-clinician receives the letter in error, then it is clear that this Policy does not apply to them.  If a clinician whose entitlement under the policy is nil because they do not breach the annual allowance receives the letter, then there is nothing misleading or incorrect with the statements in the letter (but their entitlement is nil).

Equally, if a person who is entitled to the policy does not receive the letter then they will still be entitled to payments under the policy and any contractual entitlements can be established at a later date. Therefore NHS England and NHS Improvement do not see a problem with sending the letter to all clinical staff at this stage, but it is a local decision to restrict the group to which the letter is sent.

For individuals whose substantive employer is a HEI then the HEI will need to make the offer to affected individuals.

NHS England and NHS Improvement has prepared a letter for HEIs to send out.

There will be no national support or accountability for any other arrangement offered to employees outside the Policy’s scope/eligibility criteria.