DOCTOR, DOCTOR… IN THE TELEGRAPH

TODAY’S BLOG

DOCTOR DOCTOR… IN THE TELEGRAPH

You may have come across my details in a piece in The Telegraph on Monday 10 September 2018 by financial journalist La ura Miller. Laura outlines a problem that is being observed in hospitals around the UK, in that some doctors are in the ludicrous position of effectively being forced to reduce their available hours due to the additional taxes that they will suffer for additional income. This has the inevitable potential to create longer waiting lists.

Before we go any further, let me say that Laura asked me to check some sums from a Consultant doctor who was making the point about the annual allowance excess taxes. I have made no secret of the fact that I believe the tapered annual allowance is an utterly stupid Government policy. It isn’t the first and of course will not be the last.

THIS IS GOING TO HURT

My only concern is that some may interpret the information as “greedy doctors worry about tax and so work less”. So I wish to make one point crystal clear. I have advised medics for over 25 years. I have met hundreds of them. I have never, NEVER, not even once met one that was motivated by money as a career choice. The early career of a junior doctor is particularly traumatic and frankly the NHS and Department of Health should be ashamed of the working pressures and timetables that they put them under. If you need any convincing, simply have a look at Adam Kay’s Book – “This is Going To Hurt”. Yet the system continues, because it is always under strain and there are not enough doctors to do the work within “normal” working hours or shifts.

DOCTORS EARNINGS

It is true that some doctors can earn very good incomes. The £10,000 annual allowance only applies to those with income over £210,000 – which is a lot of money by most standards. However, these are people that are highly skilled and at the top of their profession, have given way more than their pound of flesh and are constantly scrutinised for errors and lambasted by politicians and media whenever it suits. For the record, this is not Laura’s intent.

The rather ludicrous rules also impact any doctor whose pension income improves by more than £2,106 in a year. This too would push them over the standard annual allowance and potentially suffer excess tax charges. The tax charge is treated effectively as income tax at the highest rate, despite the fact that the pension has not actually been paid to them, conceivably might never be paid to them if they were to die before retirement. In essence a tax on future, yet to be received income. This sort of rise in pension benefit could come from something as innocuous as moving up the grades, or perhaps for impressive work in the form of Clinical Excellence Awards – or even returning to a full-time post.

HEARING PROBLEM

This is all to do with the way in which the Annual Allowance is calculated for those in final salary schemes. I wrote to the previous Chancellor, twice, without reply on this subject when he presided over the introduced rules. Perhaps Laura will have more success.

Suffice to say this is a complex piece of pension planning, a headache that neither the doctor, nor the NHS really should have to waste time on. Yet my advice is to all doctors is to request a Pension Annual Savings Statement as well as their Total Rewards Statement and ensure all payslips are carefully retained – as well as information about any and every form of income they receive from all possible sources. This is more unpaid work, increased stress and bureaucracy to satisfy some utterly numpty thinking at HM Treasury…. Nothing new in that though is there.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY | DATA PROTECTION

2017 Budget

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2017 Budget

The 2017 Budget from the Chancellor Philip Hammond will take place this Wednesday. In practice, few are expecting him to deliver anything significant. He has already publicly stated that there will be no “spending sprees” which is a rather unhelpful relative term, but would imply that there is unlikely to be a considerable amount of money for sectors that probably need it.

There are lots of things that I wish he would change, but I am sounding rather like a broken or at least well-worn record, that the rules around pensions are more than a little bit daft, but utterly insane – but hey, this is Government policy not common sense.

Pension Insanity

As a brief reminder of the pensions insanity. You are restricted to how much you can pay into a pension each tax year (called the annual allowance). This is currently £40,000 or 100% of your actual earned income, whichever is the lower figure.

The UK has a system where you are penalised if your pension pot exceeds a certain value (now £1million) this is called the Lifetime Allowance. You are also penalised if you earn more than £150,000 and begin to see the reduction of your annual allowance from £40,000 to £10,000. This is called pension taper relief, catchy sounding term isn’t it! Tax penalties are ready and waiting should you mess up, many will – through nothing deliberate, other than earning and income and being a member of a pension scheme, something that one would normally think were good things to do. Just for good measure your pension is valued at the point you “retire” (though in their infinite wisdom this is now called a crystallisation event) and then again at 75 with assessment against the Lifetime Allowance, which may well result in a significant tax payment – or rather it will if you exceed the Lifetime Allowance of the day.

Doctors, Teachers and Measure for Measure

Those that are members of final salary pensions like the NHS, Civil Service or Teachers Pension Schemes – basically anyone that works for a State service, which is likely to benefit us all. You possibly know someone who works within in the NHS or a Teacher, who has had increasingly pressurised workloads, with extended hours and utterly pointless assessments, form filling (for which read, Government department bureaucrats need to measure something, so let’s try this) all simply to justify their non-inflated salaries, which on occasion they have to reapply for… all because a Government can. Anyway, as these people are clearly coping too well and not leaving in the numbers that Government hoped, they are asked to calculate their annual allowance rather differently and constantly guess if they will overpay for the year, which results in a tax fine that on money that they might not receive when then retire. I am not kidding – this is not fake news.

Hollow Words, Smoke and Mirrors

When Chancellors and Prime Ministers or indeed any politician talks about serving people, one is always left suspicious as the words are invariably bereft of any action plan or follow through. There are few like the Duke, in Measure for Measure, who survey the detail of the way their citizens are governed. We all plod on regardless because the problems are apparently “just too big to fix” and “we must all have a grown-up debate”… hmm..

If Government was a business it would be in an even worse shape, for failing its customers so frequently and so outrageously. Yet whichever one is elected, they make the same empty promises and simply meddle along, tinkering at the edges hoping that everyone will quickly forget, which they will…

Dominic Thomas
Solomons IFA

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