Pensions: paying to work

The NHS pensions crisis continues to affect doctors and health services across the UK, leading to rising waiting lists and hefty – unexpected – tax bills for individuals.

Some doctors have had to essentially ‘borrow’ money back from their pensions through the ‘Scheme Pays’ system (which they have to pay back with significant interest).

Even doctors who have not been affected yet have been taking the difficult decision to cut their hours or refuse to do extra shifts or take on responsibilities such as national roles, in case it pushes them over the annual limit.

As the BMA continues to fight for a more just system, Jennifer Trueland hears from three doctors about what the pensions crisis has meant for them – including one consultant whose clinical excellence award will cost him many times its value, and another who has been pursued by bailiffs.


Rewarded with a tax bill for his efforts

Rick Body (pictured below) has won a CEA (clinical excellence award), in part for developing a decision-aid for diagnosing heart attacks that could save the NHS £100m a year.

Unfortunately, he is now likely to be hit with a tax bill costing almost twice as much as the £36,000 salary boost from the CEA.

What is more, if he uses Scheme Pays to pay the huge bill – which could be in the region of £60,000 to £70,000 – because he is relatively young at 41, he fears that paying it back with interest could cost him £250,000 over the course of his career.

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Professor Body, who is a consultant in emergency medicine at Manchester University NHS Foundation Trust, and professor of emergency medicine at the University of Manchester, applied for the award last year.

‘It was quite late in the tax year that I found out I’d got it, which meant I didn’t really have a lot of time to work out the tax implications,’ says Professor Body. ‘I knew there would be a tax cost but didn’t imagine that it would cost more than the actual value of the award.

‘But when I saw an accountant she calculated that it could be as much as £68,000 – she just said it quickly then moved on. I said: “Hold on a minute, just explain that again,” and she told me not to worry, but frankly I am worried.’

The bill came at a particularly bad time for Professor Body, who is married with two young children, as – partly on the basis of the increased salary from the award – they had remortgaged to extend the family home.

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‘I don’t mind paying tax. Consultants are paid well. But this is absolutely crazy. It’s not just this year either. Over the next few years the award will also mean a net drain on my finances, and I’ve worked out that with an interest rate of 4.8 per cent, that I’ll end up paying back £250,000 over a lifetime. It’s distasteful,’ he says.

If he could go back in time, Professor Body would not have applied for the CEA which, as is the nature of these things, was granted for ‘performing over and above the standard expected’ of his role. The particularly compelling element in his application was his work in developing and implementing an algorithm to rule in or rule out acute myocardial infarction with a simple blood test, the results being available within an hour.

‘It means that nearly half of patients [with suspected heart attacks] can go back home after one blood test rather than being admitted to hospital,’ he says. This test has already been implemented in his own hospital and is being rolled out to others in the Manchester area. Economic modelling has suggested it could save the NHS £100m per year if implemented across England.

As for Professor Body, his delight in receiving the award has been more than tempered by the likelihood of a large tax bill.

‘I asked if I could give it back, but once it’s there in your pensionable salary you can’t withdraw it,’ he says.


Bailiff threat to sell doctor’s belongings

Portsmouth consultant Partha Kar (pictured below), who is also associate national clinical director for diabetes with NHS England, has faced months of stress even after trying to pay an unexpected tax bill of almost £30,000 – including repeated visits to his home by bailiffs threatening to seize and auction his possessions.

‘When a tax bill landed – for around £29,000 – I didn’t understand why it was so high, but my way of looking at these things is that whether it’s right or wrong, it is what it is and you deal with it.

‘Obviously, I didn’t have that sort of money sitting around so I arranged to take it out of my pension pot. I spoke to NHS Pensions and they assured me it was all done but I kept getting letters from HMRC demanding payment. Every single letter I got, I contacted NHS Pensions and HMRC and they confirmed there wasn’t a problem. But the letters kept coming.’

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Then one day came a knock at the door – it was a bailiff giving notice that his goods would be auctioned if he did not pay the bill. Again he contacted NHS Pensions, only to be told that his payment to HMRC was ‘in a queue’.

He requested – and received – a letter from them confirming that the payment was in the system, but even that hasn’t stopped the continued harassment, including a further bailiff visit. The bill has risen with each letter (the last one added a £750 charge) and now he has been threatened with interest charges of 7.5 per cent.

Asked how it felt to have the bailiffs visit his home (on one occasion the door was answered by his 17-year-old daughter, and he also has a 13-year-old son), Dr Kar is remarkably calm.

‘By nature, I’m quite relaxed,’ he says. ‘We joked about it a bit as a family – I said I would auction the kids but not the dogs. But seriously I’ve been a bit gobsmacked by everything that’s been happening.

‘There are two issues here – there’s the fairness of the tax changes but I don’t think that’s for me to judge. What really matters is what comes next after you’ve agreed to pay it.’

Although he has (yet again) been reassured that all is under control, he has no confidence that the issue has been solved and warns that he cannot be the only one stuck between HMRC and NHS Pensions.

‘I have a national profile – I have a big NHS England role. If this can happen to me it can happen to everybody. It’s the system that’s wrong – and it is starting to irk me a bit.’


Penalised for tackling waiting lists

Sarah Tennant admits that she has mixed feelings about her decision not to take on extra work to help cut waiting lists. As a consultant radiologist specialising in breast imaging, she is only too aware of the shortage of radiologists and of the importance of getting images ready in a timely manner.

But the Nottingham-based specialist is already working a 48-hour week – 12 programmed activities – and in addition, she knows that working overtime could well lead to a tax bill far in excess of any extra money she would gain. She wouldn’t be working for nothing – she would be paying to work.

‘Our specialty is extremely busy and we see lots and lots of women every week. There’s a huge demand and units up and down the country have been running waiting-times initiatives to try to keep up.

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‘As someone who has worked and trained in the NHS since 1995 I feel completely torn. People are obviously worried about it but you can’t do all the work yourself in any case – you can only do what you’re able to do safely.’

She first became aware of the issue in 2017 when she found out she had breached the annual allowance. This wasn’t a big problem because at that point she was able to take steps to mitigate it by carrying forward the allowance. She also educated herself about the implications – and decided, reluctantly, that she could no longer take on additional shifts.

The complexity of the calculations and the general lack of awareness of the issue meant that she was the one who actually flagged it up to her accountant and independent financial adviser. She has also made it her mission to spread the word with colleagues and on social media.

She is, however, concerned that people might feel panicked into refusing extra work because they fear they will cross the taper threshold, or will leave the NHS scheme when it is not actually in their best interests to do so.

Dr Tennant believes the solution is to scrap the taper, but adds that the situation has highlighted how short-staffed the NHS is.

She is also aware of the risks of raising the issue, particularly in the public domain.

‘It’s difficult to express what the issue is without sounding greedy or entitled or spoilt,’ she says. ‘But I don’t think any of my colleagues mind paying tax.

‘We work in the public sector and are very happy to pay our taxes and support our hospitals. But we can’t be held personally responsible for the state of the NHS when it’s costing us money to go to work.’

Find out more about how the BMA is protecting your pensions


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