TWO THIRDS of surgeons have cut their hours to avoid bills on their pensions

The NHS introduced changes to its pension plan in 2016.

This means senior staff are now more likely to suffer an annual tax charge on their pension contributions, as well as a lifetime allowance charge on their overall pension pot. 

Pension contributions are not taxed so long as they do not exceed annual or lifetime allowances. 

People of all professions usually pay tax on their pension if the total contributions for that year exceed the annual allowance (AA), which is currently £40,000 ($49,793).

And if the pension pot is worth more than the lifetime allowance, which is currently £1,055,000 ($1,315,310), a person will also pay tax on it.

Although the AA has been £40,000 since 2014, it can go to as low as £10,000 ($12,447) if a person is subject to tapering. 

In the NHS pension scheme, the amount a person puts in each year is multiplied by a factor of 16-to-19. Therefore small increases in pensionable pay can generate very large growth.

Tapering occurs when the taxable income exceeds £110,000 ($137,142).

If the income is more £110,000, a person needs to calculate their adjusted income.

If this is more than £150,000 ($187,026), the AA tapers by £1 ($1.24) for every £2 ($2.48) that their adjusted income is above £150,000.

In the case of a consultant with a pension growth of £100,000 ($124,673) but a threshold income of £110,000, they retain a standard AA.

But even as little as £1 of additional income would result in AA reducing to the minimum of £10,000. 

This £1 of extra income could increase the tax payable by £13,500 ($16,811).  

Many consultants only realised this years later. The BMA predicts 30 per cent of the medics have been affected.  

Opting to earn less causes a medic’s pension pot to grow more slowly, which reduces their risk of being hit with a tax bill.  

Full-time doctors are typically contracted to work 10 shifts, each lasting four-to-five hours, a week.

However, consultants usually go above and beyond this by working 11 or 12 shifts to keep up with demand. 

They get paid overtime for this additional work, which can then affect their pension.