I MUST respond to Christopher W Ide (Letters, September 14), who attempted to explain the tax position impacting on doctors. Mr Ide’s explanation covers the impact of the Lifetime Allowance (£1,055,000 for tax year 2019/20) has on pension benefits at retirement. While this is a problem that many doctors will face, the problems currently facing them arises from the Annual Allowance. This a limit on the amount of pension savings that can be accrued each year. For most of us the Annual Allowance is £40,000. But for those with total income from all sources of more than £150,000 the Annual Allowance is reduced by £1 for every £2 in excess of £150,000 to a minimum of £10,000. For a scheme like the NHS scheme the calculation of the annual input is a fairly complex calculation, but essentially is the value of the pension accrued over a year. Also although it can be estimated, it cannot be calculated until the end of the year.
The problem for doctors is that any pension accrual valued in excess of the Annual Allowance is taxed at 46 per cent. Also, as this will apply to doctors earning over £150,000 the initial income will also have been taxed at 46 per cent, have had National Insurance Contributions of two per cent as well as employee pension contribution of 14.5 per cent deducted.
This is by no means a full explanation, there are a number of other factors which can impact such as the carry forward of unused Annual Allowance; however, as this is only available for three years and the new regulations were introduced more than three years ago, in most cases this would not help.
I could go in to more detail but believe the above to be taxing enough.
Allan Maxwell, Chartered Financial Planner, Glasgow G3.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here