NHS to pay doctors' tax bills in attempt to avert a winter crisis

Laura Donnelly
Medics will be told their pensions can be topped up to compensate for extra taxes paid this year  - PA

 

Doctors will have their tax bills paid by the NHS in a bid to avert a winter crisis caused by understaffing. 

Thousands of medics will be offered an emergency deal, amid growing concern about the number of consultants refusing to work overtime because they are hit by a pensions “tax trap”.

The rules mean doctors can be hit with tax rates of more than 90 per cent on their earnings - including their pension contributions - if they earn more than £110,000 a year. 

It means consultants are substantially cutting back on any overtime or weekend work as they can be taxed thousands for earning a penny over the threshold.

Matt Hancock, health secretary, will today issue a ministerial direction instructing NHS chiefs to introduce a plan aimed at heading off an immediate crisis.

Last week official statistics revealed Accident & Emergency waiting times are the worst since records begun, stoking fears about how the NHS will cope this winter. 

Under the new terms, clinical staff will be told that tax bills caused by overtime can be paid out of their pension, with the NHS committing to later topping up their pots, so the total value of them is not reduced. 

The deal - for this financial year only - could cost the health service hundreds of millions of pounds, but will be spread over decades, as the money will not have to be found until medics retire. 

The timing of the announcement during the election campaign is likely to prove controversial, with guidance on “purdah” advising ministers to avoid major announcements or new policies.

The Treasury is understood to have agreed the deal, following pressure from the Health Secretary, with the operational details due to be announced today by NHS England. 

The generous terms will only cover the current financial year, with the Conservatives expected to commit to longer-term changes in their manifesto. 

Ministers will argue that the move is necessary in order to respond to immediate pressures on the health service.

But the timing of the decision may attract criticism that it is an attempt to avoid an early winter crisis that could hit the Conservatives electorally.

More than two thirds of consultant surgeons say they have cut their hours, in a bid to protect their earnings, a poll for the Royal College of Surgeons found. 

And a survey by the Royal College of Emergency medicine found three quarters of A&E consultants said they were thinking of cutting their hours, in order to cut their tax liability. 

The NHS pensions changes brought in in 2016 have impacted upon doctors earning more than £110,000 a year due to the introduction of a tapered annual allowance.

This is a taxation threshold which restricts the amount of pension growth individuals are allowed each year before tax charges apply. It gradually reduces the allowance for those on high incomes, meaning they are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits.