The Government is making changes which will mean that doctors with income over certain limits will have their Annual Allowance restricted. In this article we will consider how the new tapered annual allowance will operate in practice.
Doctors whose earnings either exceed £110,000 (threshold income) or £150,000 (adjusted income) will be affected.
£110,000 - The Threshold Income
Threshold income is broadly a doctor's net income in a tax year.
£150,000 - The Adjusted Income
Adjusted income is broadly a doctor's net income for the tax year plus any pension contributions which have been made from employment income under net pay (i.e your employer's NHS Pension contributions). To calculate your NHS Pension Scheme deemed contribution for this purpose you will have to use the normal workings following annual allowance rules and then subtract from this figure the total of any of your actual personal contributions to the NHS Pension scheme paid in the tax year.
Impact of the Rules
The rate of reduction in the Annual Allowance is by £1 for every £2 that the Adjusted Income exceeds £150,000, up to a maximum reduction of £30,000.
If you are high-earning doctor in Bristol please get in touch for advice on how the new rules may affect you and your finances on email@example.com or telephone 0117 966 5699.