‘Punitive’ changes to pension taxation in next week’s Autumn Budget, as well as ‘unintended consequences’ of national insurance rises, could cause the closure of even more GP practices, the BMA has warned.
The union said that doctors ‘have been alarmed’ by ‘media speculation’ ahead of the Budget, including changes to the lump sum pension allowance, national insurance rises and changes to wider pension taxation.
Next Wednesday (30 October), Rachel Reeves will deliver her first Budget as chancellor, and the first Budget from a Labour Government for 14 years.
It has been reported that both the Prime Minister and chancellor ‘have refused’ to rule out an increase in employer national insurance payments, and that the Budget could include reducing the cap on tax-free lump sums from pension pots.
The ‘punitive’ changes would ‘prevent doctors from taking on additional work’ and ‘force them’ to reduce their workload or leave the NHS entirely, the BMA’s pension committee chair Dr Vishal Sharma said in a letter to the chancellor yesterday.
Regarding potential proposals around national insurance rises – either flat increases of employer contributions, or introducing national insurance tax on employer pension contributions – Dr Sharma said that these would represent a ‘significant increase in cost’ GP practices and trusts as employers.
He said: ‘GP practices are already under immense financial pressures – levying further costs could likely cause the closure of even more practices.
‘If this is contemplated the impact of this on the NHS must be met in full or the NHS must be exempt from this change.’
The BMA is calling on assurances from the Government that it will:
- Not reduce tax-free pension lump sum allowances;
- Not reintroduce the lifetime allowance;
- Not introduce a flat rate tax relief on pension contributions;
- At least index the annual allowance threshold in line with inflation and provide a solution for the poorly designed annual allowance taper.
The union said that reducing the tax-free pension lump sum allowance would cause a large number of doctors to retire immediately in order to not be hit by ‘huge tax bills’ that they had ‘not planned for’.
Dr Sharma added that the wrong changes to pension taxation could ‘completely derail’ Government plans to reduce waiting lists, ‘before they have even started’.
He warned that the tapered annual allowance is already impairing senior doctors’ ability to take on additional work but some of the potential changes ‘could result in doctors retiring on an unprecedented scale’.
Dr Sharma added: ‘After many years of doctors being left with little option but to take action, such as reducing their workload or leaving the NHS entirely, to mitigate the disproportionate impact of pension tax policy, the last thing that the NHS needs is further detrimental changes.’
The BMA’s demands in full
The BMA is calling for the Government to ensure that the Budget:
• Does not reintroduce the lifetime allowance as doing so will result in large numbers of doctors retiring early.
• Does not introduce a flat rate tax relief on pension contributions. There is already tiering of employee contribution rates within the NHS pension scheme that adjusts for higher rate tax relief. Introducing such a change will reverse the progress on restoring doctors pay and risk reigniting the recent pay disputes.
• At least indexes the annual allowance threshold in line with inflation and provides a solution for the poorly designed annual allowance taper, which can trigger additional tax charges of up to £22,500 as a result of just £1 of further earnings. This effectively leaves many doctors paying to do additional work. In a survey of BMA members across the UK in June 2024, they made clear that the tapered annual allowance presents a serious risk to the Government’s goal to deliver an extra 40,000 appointments through extra weekend and evening working. 71% of all respondents indicated that if there were no reforms to the tapered annual allowance, this would prevent or limit their ability to take on additional overtime. Amongst consultant respondents this proportion rose to 77%.
Source: BMA
A Treasury spokesperson told Pulse: ‘We do not comment on speculation around tax changes outside of fiscal events.’
It comes after the BMA urged the Treasury to increase GP core funding by ‘at least £40 per weighted patient’ – around £2.5bn – ahead of the Budget.
In a submission to the Treasury outlining NHS ‘funding priorities’ over the next year, the union put a particular focus on the need to boost GP funding.
And the union has also recently claimed that thousands of GPs in England are experiencing significant issues with their pension records due to ‘maladministration’ by Capita
Union that has consistently called for higher taxes to fund the NHS complains about higher taxes.
Hilarious.