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NEWS: New plans to ease pensions trap GP shortages

Doctors are to be offered a new option to ease the pensions trap in the hope of preventing hours being restricted over the winter, it was reported last night.

Initial reports suggested the government or NHS would offer to pay some tax bills in a complex arrangement using a loophole in the pensions allowance system. Medical organisations warned they would be studying carefully the details, expected to be announced by NHS England today.

Meanwhile the Scottish government announced its own measures to tackle the pensions trap, promising to introduce new measures to allow doctors to make flexible payments.

The English scheme relies on a clause in the tax form allowing a taxpayer to ask that their pension fund pay the tax on their pension. Doctors have reported facing tax bills approaching £100,000 as the liabilities have increased.

According to the proposals, NHS England would promise doctors to top up the pension fund at a future date to repay the tax. However as the tax is assessed on the increased value of the pension fund, this promise might prove to be taxable as well – unless it could successfully be deferred until after a doctor retired.

British Medical Association chair Dr Chaand Nagpaul said the proposal was one of several the BMA had put forward. He said: “We don’t yet have important details about how the such a scheme will work; details that are crucial to the BMA and to the tens of thousands of doctors that we represent in order to provide the necessary reassurance that doctors can take on additional work without this resulting in any financial penalty.

“We look forward to having those details in the very near future and call on the next Government to urgently scrap the annual allowance in defined benefit schemes such as the NHS, a solution proposed by their own advisory body, the Office for Tax Simplification.”

* Under the Scottish proposals, doctors will be able to take their pension contributions as basic pay rather than payments into their pension fund. Scottish health secretary Jeane Freeman said: “This will make a significant contribution to supporting frontline services and medical specialities who are working round the clock to deliver the highest possible quality of care.”

Professor Derek Bell, president of the Royal College of Physicians of Edinburgh, said the announcement was “positive.” He said: “We would ask the Scottish Government – and indeed the other devolved administrations – to continue dialogue with the UK Government about implementing flexible pension arrangements, which will give doctors the freedom to plan for their futures. But it is important to point out that the financial circumstances of each doctor are unique. Therefore, we would encourage all individuals to get professional financial advice, to address their own circumstances.”

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