The 11 February deadline for GPs in England to claim for compensation against the pension annual allowance tax charge for 2019/20 has been extended for those who ‘through no fault of their own’ have not yet received a pensions savings statement’, NHS England has confirmed.
Those GPs affected will be able to submit their application for six months after receiving their 2019/20 pension savings statement.
Last week, the Association of Independent Specialist Medical Accountants (AISMA) called for an extension of the deadline because many GPs had still not received the information they need to make a claim.
A special compensation arrangement was set up for clinical staff caught by the tax charge during the year 2019/20. Under the arrangement, members of the NHS pension scheme elect for the scheme to pay the tax charge on their behalf. When they retire, they are then compensated for the effect of the deduction on their income from the pension scheme.
GPs in England must first have submitted a ‘scheme pays’ election to NHS Pensions and were due to submit a claim for compensation to PCSE by 11 February 2022. Before they can make a claim, they need to receive a pension savings statement for the year from NHS Pensions. However, many GPs have yet to receive their pension savings statements and nor have their pension records been updated, according to AISMA.
It meant GPs were at risk of losing compensation that could be worth thousands of pounds across the years of their retirement, warned James Gransby, AISMA vice-chairman and partner at RSM UK Tax and Accounting.
NHS England has since announced that the closing date for applications has been extended.
‘Late applications will be accepted where through no fault of their own clinicians have not yet received a pensions savings statement for 2019/20. They will be able to submit their application for six months after receiving their pension savings statement. If a clinician is submitting their form late, they should follow the current instructions regarding authorisation of their application, which are outlined on the application form‘.
NHS England has also advised that GPs check whether they have any missing end of year certificates for previous years.
It said: ‘This is important as Pensions Online won’t be up to date if there are any missing certificates and this will prevent a pension savings statement being issued, and your ability to confirm whether or not you should apply for the 2019/20 pensions annual allowance charge compensation scheme. This can be easily checked by logging on to your PCSE Online account.’
Andrew Pow, board member of AISMA and healthcare partner at Mazars, urged GPs to get their claims in as soon as they can, since ‘there is no guarantee of when claims received after 11 February will be processed by PCSE.’
Under the current NHS pension scheme, the highest-earning GPs pay at least 14.5% in contributions, but a tapered annual allowance limits the amount of money that can go into the pension pot each year without facing significant tax penalties.
The pensions taxation rules, in particular around annual and lifetime allowances, push GPs to reduce their hours or retire early to avoid large tax bills.
But for the 2019/20 tax year, GPs facing a tax charge over the pension savings annual allowance threshold can have this charge paid by the NHS pension scheme by filling in and returning a scheme pays election and a compensation form.
To access the compensation, GPs will use the ‘scheme pays’ arrangement already available to NHS pension scheme members, which usually allows tax charges to be deferred until retirement.
GPs are required to submit a ‘scheme pays’ election to NHS Pensions before they can submit a claim for the compensation to Primary Care Support England (PCSE).
The Government made the compensation available in 2019 in order to allow clinicians to take on more shifts or sessions without worrying about an annual allowance charge on their pensions.
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