Prime Minister Boris Johnson has been warned that ‘punitive’ pension taxation is the greatest threat to the medical workforce.

In a letter to Johnson, from the British Medical Association’s (BMA) most senior doctor, chair of the council, Dr Chaand Nagpaul, the Prime Minister was told that without action by the Treasury to fix the issue, doctors will have no choice but to reduce the amount of work they do for the NHS, or leave it entirely, to avoid unexpected tax bills.

During his leadership campaign, Johnson stated he would ‘fix’ the issue of the lifetime allowance, which the BMA has welcomed. However, Dr Nagpaul pointed out that the problem doctors face is “further exacerbated by the annual allowance and tapered annual allowance”.

“Without action by the Treasury to address the cumulative impact of these policies, doctors will have no choice but to reduce the amount of work they do for the NHS, or leave it entirely, to avoid unexpected tax bills that can be four, five, or even six figures in some cases. The NHS already has 10,000 unfilled medical vacancies and we simply cannot afford to lose any more or for those staff we do have to reduce their availability, which is precisely what we are seeing as a result of current government taxation policy.”

In his open letter, Dr Nagpaul told Johnson that if, as he stated, he wishes to bring down GP waiting times, then he must act to address the GP workforce problem and vastly improve the availability of support in the community.

The letter follows the government’s decision to rule out making any changes to the tax system, instead proposing a 50:50 type model as a solution to the NHS pensions crisis.
In a consultation published, 22 July, the Department of Health and Social Care outlined the 50:50 plan, as well as improvements to the Scheme Pays model, but added, “annual allowance serves a legitimate purpose” and it will not make changes to the tax system.

Under the proposals, clinicians can reduce their pensions accrual by 50 per cent, as well as paying 50 per cent lower contributions, a move which the government accepts “does not provide unlimited flexibility” and recognises that “some clinicians may continue to experience annual allowance tax charges”.

It said: “The government considers that a 50:50 option appropriately balances the benefit of flexibility with the fiscal impact. The 50:50 option allows clinicians to build up their pension more slowly at a lower cost and reduce their exposure to large regular annual allowance tax charges.

“Whilst the 50:50 option is primarily aimed at increasing NHS capacity and service delivery by providing clinicians with a further option to manage their annual allowance tax exposure, it is likely that it will also assist with the lifetime allowance because members' pensions will build more slowly.”

The proposal has previously come under staunch criticism from across the industry, with the BMA leading the rally against the solution. It said it is “highly sceptical” of the consultation which must lead to “tangible reform to the current taxation”.

Since the introduction of the annual allowance taper in April 2016, and the lowering of the tax relief threshold from £1.25m to £1m, many consultants are penalised for continuing to pay into their pension fund.

Calls have been growing to scrap the taper, which is thought to bring in £6bn of revenue for the government, however formed Chancellor Philip Hammond ruled this out, describing it as necessary “to create a fair system and protect finances”.

In his letter to Johnson, Dr Nagpaul also touches on the Prime Minister’s stance on Brexit.
“Brexit is clearly at the forefront of your agenda. The BMA is alarmed at the prospect of a no deal Brexit and we have repeatedly warned that such an outcome could have potentially catastrophic consequences across the NHS. Given these risks, I am urging you take every possible step to avoid no-deal.”

Dr Nagpaul concludes by offering to work with the government in the pursuit of a “vital goal” - ensuring that the NHS is able to provide the best care possible to patients across the UK.

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