High earners' tax break under discussion - Redwood Financial

High earners’ tax break under discussion

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The tax situation of high earners in the NHS has been a hot topic over the last few months because of the negative tax implications to which they have been subject. There has been much speculation about how the government is going to solve this ongoing issue.

Whilst previous solutions have been considered “sticking plasters” rather than long-term fixes, the Treasury has recently announced a proposal to raise the threshold for the tapering of the Annual Allowance from £110,000 to £150,000 for everyone, something they seem to consider to be a longer term solution.

This further tinkering with the already complex taxation system around pensions has raised concerns across the industry, with many people calling for the tapering of the pension Annual Allowance to be completely scrapped to simplify things going forward.

There is no doubt that raising the threshold income limit by £40,000 will allow a large percentage of NHS high earners to work extra shifts without being penalised with large tax bills, but whether this is the final solution to such a complex problem is yet to be seen. What probably should happen is an overhaul and simplification of the pension and taxation process, which will take a huge amount of time and resources.

The outcome and final decisions on proposals to resolve this issue are due to be confirmed in the Budget, set for 11th March this year, which does not allow enough time for the overhaul needed, so I am sure this issue will raise it’s head again in the not so distant future.

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Redwood Financial is one of the south’s leading Investments, Pensions,Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation.

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Steve Blofield
Steven Blofield
Steven is the Director and Senior Estate Planner at Redwood Financial. He helps clients manage and grow their wealth and protect their estate. You can read more about Steve in his personal biography.
Redwood Financial is one of the south’s leading Investments, Pensions, Wills, Trusts & Estate Planning providers and we are dedicated to helping families to grow, protect and enjoy their wealth. With our unrivalled knowledge of Estate Planning, Lasting Powers of Attorney, Probate, Pensions, Savings & Investments, we can advise on any situation.
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