Annual Allowance Tax Charges 2019/20 – How Will The Compensation Scheme For Doctors and Dentists Work?
Q. I’m aware that the government have promised to pay any Annual Allowance tax charges incurred during tax year 19/20.
I’ve not received my Annual Allowance figures for 19/20 yet, so what shall I do now as I’m not sure if I’ll have exceeded the allowance and therefore have any tax charges due?
A. The Annual Allowance figures will be sent to you within 3 months of your request. Also note that in some instances, NHS Pensions will be able to provide the figures to you over the telephone.
The key is that, if you do have a tax liability you will need to use the scheme pays facility as this will ensure that the government will cover the tax. The other option is to pay it via self-assessment, however if you do this you will NOT be reimbursed by the government.
Even if you have not received the Annual Allowance figures by early January, there’s no need to panic.
What you can do is complete a scheme pays election (SPE), providing estimated or nominal figures
for both the 1995 / 2008 and 2015 schemes.
Then, when you do have the figures, you can submit another SPE, which will replace the previous one.
If you don’t have a tax charge, you can enter zero on the second SPE.
Whilst the formal deadline for scheme pays isn’t until 31 July 2021, members are encouraged to submit
the forms by 31 January 2021 as this will avoid any interest charges that the scheme has to pay on
payments after this date.
The next part of the process is to complete an Annual Allowance Charge Compensation Policy Form,
which is now available in England and will be available early next year in Wales.
The deadline for completing the compensation charge form is not until 31 March 2022.
This will allow affected clinicians (doctors and dentists) to claim the contractual payment at
retirement equivalent to any reduction in pension arising from the scheme pays charge.
Note that the form should only be used by GPs and Clinicians. Dentists will need to apply online
via Dental Services.
NHS England has promised that compensation will be paid to cover the deduction. This promise will
apparently take the form of a contractually binding commitment, backed by the NHS and the Secretary of State for Health and Social Care.
Finally, also note that the scheme covers NHS England and NHS Wales, but not NHS Scotland.
Compensation Policy Infographic (clinicians, including dentists)