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.