The Chancellor confirmed in today’s budget that he is raising the pension taper threshold to £200,000.
It has previously been suggested that this threshold would be raised in order to ensure doctors — and other higher-paid public sectors workers — aren’t hit with tax bills for overtime.
However this new threshold is significantly higher than previously suggested.
In his Budget speech the chancellor, Rishi Sunak, says this will take 98 per cent of consultants and 96 per cent of GPs out of the scope of this taper tax.
At the same time Sunak also announced that the annual pension allowance for those earning over this sum would be reduced: from £10,000 to just £4,000.
Those earning below this threshold have an annual allowance for pensions of £40,000.
Previously this taper had been applied once earning hit £110,000. At this point individuals were assessed, and any other earnings were added to their income. If this total exceed £150,000 then their annual allowance started to reduced.
This created problems for those working uneven hours and overtime. This has resulted in number of consultants and doctors in the NHS turning down additional shifts, or retiring, to avoid large tax bills, in some cases running into six figures.