George Bull

Written by:

George Bull

Senior Tax Partner

It’s wrong to leave the NHS to fix the pensions tax problem

It’s disappointing to see the Treasury and HMRC stepping aside from what has been described as the "NHS pensions allowance problem", leaving the NHS to resolve a tax-driven issue which is translating into rapidly growing hospital waiting lists. 

The NHS has vast skills and resources at its disposal, but it does not have the ability to change the tax system. Any resolution which the NHS might try to negotiate with hospital consultants will therefore be limited, and likely to produce unintended consequences elsewhere.

This is a Treasury problem and should be resolved by the Treasury through HMRC. As we said last week, there is a compelling argument that – as the value of pensions tax reliefs is already curtailed by the lifetime limit – the only impact of the annual allowance taper is to reduce the rate at which the individual gets to the lifetime limit.

Wouldn’t it be simpler if tax laws were changed to abolish the annual allowance taper for everybody? This would cost the Treasury little or nothing in the long term, it would reduce the complexity of the tax system and it would remove this latest contributor to hospital waiting lists. Most importantly, it would leave the NHS free to do what it does best: making people better.

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