Patient care suffering due to pension tax bills

Thursday 8th August 2019

Scotland’s largest professional body for doctors is warning that unexpected pension tax bills are having a “significant” effect on patient care.

The British Medical Association (BMA) Scotland has called for urgent action from the Scottish Government, similar to reforms announced by the UK Government earlier this week, to address pension tax bills that have financially penalised doctors to such an extent that some have effectively been “paying to go to work”.

Dr Lewis Morrison, chair of BMA Scotland, said:

“There is no doubt the punitive, unexpected pension tax bills that doctors are receiving across Scotland is beginning to impact significantly on patient care.

“The initial findings of our own survey of members found that more than half of those responding were planning to reduce their workload, or had already had to out of fear of being financially penalised by these bills.

“Nearly a quarter said they were now being forced to consider retiring early. These are doctors who have devoted their career across the whole NHS to caring for the people of Scotland – often in already worryingly understaffed services.

“The perverse nature of these rules mean that some doctors are now facing the completely unjust prospect of paying to go to work.

“This simply cannot continue. Today’s announcement for doctors in England and Wales shows that at least the issues are being acknowledged and that politicians are beginning to act after substantial pressure from the BMA. However even with these steps there remains substantial work to do to deliver a truly sustainable long-term solution.”

Following changes to the level of earnings that could be accrued tax-free when working overtime, some doctors started refusing to take on additional work after it became apparent almost all extra earnings would be lost in tax.

Previously described by the BMA as “perverse and ill-thought out tax legislation” that was having a damaging effect on already understaffed NHS services, the pension arrangements have been linked to a rise in waiting times for routine surgery in England and Wales.

New rules are to be published in the coming weeks, but the UK Government has said it plans to allow doctors ‘complete flexibility’ in scaling down pension contributions so tax-free allowances are not breached and additional work regains its financial incentives.

Dr Morrison tentatively welcomed the review announced by the UK Government, and urged action from Nicola Sturgeon’s administration:

“Introducing flexibility on pension contributions will provide some short-term relief for some doctors if adopted in Scotland,” he adds.

“We have already raised this with Scottish Government and will be looking for a positive response to this new development from them at the earliest possible opportunity.

“In particular, the UK Government have said that reducing employee contributions will not mean doctors ‘losing out on the value of unused employer contributions’.

“In Scotland, we need the Scottish Government to take urgent action on this and make sure that doctors in our NHS do not lose this aspect of their remuneration regardless of what their contribution rate may be.

“Indeed when the annual and lifetime allowance taxes force doctors out of the pension scheme altogether, they should not lose out either.

“So it is important the Scottish Government respond rapidly to ensure Scottish doctors are in no way disadvantaged compared to UK counterparts.”

UK Government officials had ruled out a review of the pension tax rules some weeks ago but yesterday confirmed a review would take place. Emphasising the need for a “short and sharp”, review Dr Morrison said:

The UK Government has announced a more fundamental review of the complex rules around annual allowances

We need urgent action to ensure that all doctors in Scotland are able to go back to working to their full capacity and availability as quickly as possible, without the fear of being financially penalised for doing so.

“This has to happen for the good of NHS services and the people we care for – so it is crucial a review is short, sharp and gets to the heart of these issues effectively.

This will be the true test of whether the UK Government is genuine in its wish to act. Simply using a review to put off decisions won’t be acceptable.”