DOCTORS - and the NHS - were thrown a lifeline this week after the UK Government finally resolved to do something about a pensions issue that has seen senior clinicians shun the extra shifts needed to keep the service going.

Thanks to a combination of inflexibility in the NHS pension and the tapered way tax reliefs have applied to higher earners since 2016, doctors earning over £110,000 have run the risk of incurring large tax bills as a result of taking on extra work.

Though the tapered allowance was designed to stop the wealthy benefiting disproportionately from tax breaks, the complex way the charges are calculated - taking account of pensions growth as well as cash contributions for defined benefit savers - means many doctors have had to pay more in taxes than they have received in overtime pay.

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Those who have been hit have stopped taking on extra shifts as a result, while others are now shunning the extra work for fear they will be hit too. At a time when there are 449 unfilled medical consultant posts in Scotland alone, more than half of which have remained vacant for six months or more, that is clearly unsustainable.

In recent months everyone from the British Medical Association (BMA) and Hospital Consultants and Specialists Association (HCSA) to East Renfrewshire MP Paul Masterton and Scottish health secretary Jeane Freeman has called on Chancellor Philip Hammond to ameliorate the situation by changing the way the tapered tax allowance works. Despite this, the Government this week signalled its intention to alter the NHS pension scheme instead.

Speaking on Monday, health and social care secretary Matt Hancock announced a consultation that could ultimately relax the rigid rules governing the NHS scheme, allowing clinicians to halve the amount they save into their pension in exchange for halving the rate at which their pension grows.

If approved the changes will, he said, “give clinicians greater flexibility to manage their pensions, have more control over their future, and offer a deal that’s fair to doctors, taxpayers, and the patients they care for.”

However, while the so-called 50:50 option would ostensibly solve the issue by making it less likely that high-earning NHS employees will breach their annual allowance, Phil Bowler of financial advisory business Chase de Vere Medical said it could create new issues of its own.

“There’s a lot of fear among consultants [meaning] a lot who aren’t affected by the tax consequences could take it up and that could end up affecting their pension long term,” he said.

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“I’m not sure it’s going to be the ultimate solution that we are after. The ultimate solution would be to totally rehash the whole tax.”

Ian Browne of wealth advisory business Quilter agreed, noting that due to its complexity the annual allowance taper, while well meaning, has ended up backfiring.

“While this consultation is welcome recognition that there is a problem, it really should be a job for the Treasury to revise its pension-tax policy, rather than the Department of Health and Social Care to adapt around the annual allowance taper,” he said.

This is also the opinion of doctors’ groups, whose members have reported having to mortgage their homes to pay unexpected tax bills that in some cases have run into tens of thousands of pounds.

Noting that “fundamental reform of the pensions tax system is the only way out of this crisis”, HCSA pensions committee chair Dr John West said the “half-hearted” 50:50 plan “will do little to tackle the problems facing hospital doctors”.

“Encouraging individuals to halve their pensions contributions to try to avoid collision with the fiendishly complicated tax system effectively punishes them for a pensions crisis not of their making,” he said.

Simon Barker, chair of the BMA’s Scottish consultant committee, said the 50:50 pension plan amounts to nothing more than “a cheap sticking plaster for a major haemorrhage” that will ultimately serve to devalue doctors’ pensions.

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“This is therefore far from the answer we are seeking to the pensions-tax crisis problem,” he said. “We still need comprehensive reform to tackle the issue for good, both on taxation in Westminster and here in Scotland, where much more could be done to mitigate the pensions-tax crisis.”

For its part the Scottish Government has urged Mr Hancock to act quickly, with a spokesperson saying that “once full details of this flexibility are known the Scottish Government will work with stakeholders to consider its introduction for the NHS scheme in Scotland”.

Mr Hammond, meanwhile, who has been urged from many quarters to reform the system of pension tax reliefs over the past two years, continues to keep his counsel.