[UK] The Tapered Annual Allowance and NHS England

The tapered annual allowance is a complicated calculation that reduces the annual allowance.  For every £2 adjusted income goes over £150,000, the annual allowance for that year reduces by £1. The minimum reduced annual allowance you can have is £10,000.

NHS England have long held that the tapered annual allowance is a barrier to senior staff taking on more work.  This was outlined in a letter from Simon Stevens, Chief Executive of NHS England to Matt Hancock, the Secretary of State for Health and Social Care Secretary. 

In response, Mr Hancock agreed that to protect patient care over winter 2019/20, the issue could not wait until a Budget announcement or the outcome of a September 2019 consultation on the topic.  He agreed that an exception would be made in tax year 2019/20 for “tax planning” in the form of a “Scheme Pays” facility to settle an annual allowance tax charge arising from pension saving in the NHS schemes in 2019/20.

Global Payroll Association Comment

The problems with the tapered annual allowance are not just for NHS staff and certainly not only for NHS staff in England.  But that is where the concession applies as can be seen from the exchange of letters. 

Note that this only applies in tax year 2019/20 and we look forward to the results of the consultation in due course.

The tapered annual allowance is a complicated calculation that reduces the annual allowance.  For every £2 adjusted income goes over £150,000, the annual allowance for that year reduces by £1. The minimum reduced annual allowance you can have is £10,000.

NHS England have long held that the tapered annual allowance is a barrier to senior staff taking on more work.  This was outlined in a letter from Simon Stevens, Chief Executive of NHS England to Matt Hancock, the Secretary of State for Health and Social Care Secretary. 

In response, Mr Hancock agreed that to protect patient care over winter 2019/20, the issue could not wait until a Budget announcement or the outcome of a September 2019 consultation on the topic.  He agreed that an exception would be made in tax year 2019/20 for “tax planning” in the form of a “Scheme Pays” facility to settle an annual allowance tax charge arising from pension saving in the NHS schemes in 2019/20.

Global Payroll Association Comment

The problems with the tapered annual allowance are not just for NHS staff and certainly not only for NHS staff in England.  But that is where the concession applies as can be seen from the exchange of letters. 

Note that this only applies in tax year 2019/20 and we look forward to the results of the consultation in due course.