Dr Benjamin Holdsworth on how to apply for tax charge help
If you would like the government to pay a tax bill caused by breaching annual pension savings limits in 2019/20, the deadline for applications is fast approaching. To be eligible, you must apply for ‘Scheme Pays’ to settle your tax charge by 31 March 2022.
The government agreed to pay the tax charge of clinicians in England and Wales who breached the annual allowance for the tax year of 2019/20 – but only if those affected applied for ‘Scheme Pays’ to claim the compensation.
The annual allowance limits the amount of tax-free pension savings per year. The standard allowance is £40,000 but this then tapers on a sliding scale depending on earnings. Pension growth above the applicable rate will incur tax charges.
The Scheme Pays deadline normally falls on 31 July each year but was extended to March this year to support those dealing with the impact of the pandemic.
Time is now running out to get your application submitted if you have not already done so – and remember that the compensation form must be counter-signed by your hospital trust.
As the rules surrounding the NHS pension and taxation will change again this year, it is imperative to get your figures and finances double checked. The much talked about McCloud judgement will most likely mean that your numbers for the last few years need to be amended retrospectively and it would be wise to ensure you start with accurate figures.
The ‘McCloud’ judgement ruled that moving some doctors to the 2015 NHS Pension Scheme was discriminatory and that compensation would be offered to those affected.
Dr Benjamin Holdsworth is director of Cavendish Medical – specialist financial planners for medical professionals in the NHS or private practice. For a second opinion on your finances, please contact us on 020 7636 7006. www.cavendishmedical.com
The content of this article is for information only and must not be considered as financial advice. Cavendish Medical always recommends that you seek independent financial advice before making any financial decisions.
Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. The value of investments and the income from them can fluctuate and investors may get back less than the amount invested.