1/ A thread about annual allowance in 21/22👇 [+ new free tool]
Many will have received a nasty brown envelope from @nhs_pensions this week. If you have (and even if you haven't) you may need to take action. Pay attention and share (please RT) with colleagues who may need this!
2/ OK if you already have statements for 21/22 (& if you are member of two schemes i.e. 1995 & 2015 you need TWO statements) you can miss this step.
But if you are a high earner (say >£90k) & you haven't, request one today (it can take 3 months)
3/ Next you need to establish if you have an AA liability in 21/22. To do that you can use the free HMRC calculator. Its not that straightforward, but I would *strongly* advise to do your own calculations, even if you have an accountant/advisor.
4/ You can watch my video here. I did it for the 18/19 tax year, but its similar for the 21/22 tax year (see next tweets for differences) and I have updated the accompanying spreadsheet
Basically fill in the grey cells with your pension growth (as per statements) & your total taxable income (from all sources) and it will give output in the yellow cells
As per the video above, & as per the HMRC instruction- tick years in which you were a member.
I would always tick *at least* 7 years prior to the current year, so you may need to get this data from the scheme
7/ Ive added a section on the spreadsheet to make it easier to use the "check your answers" section on the HMRC calculator (left) with a copy of the data you have entered (right) to check its the same
8/ When you get to the calculation results of the HMRC calculator (which looks a bit different to the earlier version from the video) note the "available annual allowance" - which includes any carry forward you might have and/or tapering, and put it the highlighed red cell
9/ As a further check the highlighed blue cell should be the same as the HMRC calculator "amount on which tax is due" (excl. any private pension) - this section will also show you any required split should you need to use "scheme pays"
10/ As noted in the video, DON'T assume if you haven't received an envelope = no AA charge. The scheme dont know if you are "tapered" (i.e. your taxable income was over £110k to 19/20, or £200k after 20/21, so available allowance maybe as small as £10k (£4k from 20/21)
11/ Similarly you might not have received one because your employer / (or PCSE / @CapitaPlc) have not updated the pension agency. So if you haven't received a PSS, request one today using that template above
12/ Following an extensive @BMA_Pensions campaign, the taper changed from 20/21
From that tax year going forward (but not 16/17 to 19/20)
✅ Threshold income ⬆️ to 200k (previous 110k)
✅ Adjusted income ⬆️ to 240k (previous 150k)
❌ Min AA ⬇️ to 4k from 10k
13/ These changes take many doctors out of tapering (unless total income >£200k) but doesn't change the general AA (£40k) so many still affected
will apply the old limits to 19/20 (blue), & the new limits from 20/21 (green)
14/ OK so now, having watched the video, and used the tool / HMRC calculator, you should know if you have an AA charge for 21/22
Unlike 19/20 there is not a "compensation scheme" for clinicians (in England & Wales), so if there is a charge it needs to be paid (or scheme pays)
15/ Many of you will be aware of the ongoing "age discrimination" or "McCloud" case. Im not going to go over it here (if you want to see threads in my pinned tweet).
Basically (after October 2023), this tax year will need to be recalculated as if you were in your "legacy" scheme
16/ For now I would advise you to largely ignore this. For tax year 21/22 you can only work out your position based on the data provided by the scheme which will currently ignore the McCloud case (as per the scheme's instructions) from @hmtreasury
17/ *However* McCloud may affect your decision *how* to pay any AA charge for 21/22
For most clinicians and other high earners in the NHS, if you have an AA charge for 21/22 it will go down (or dissapear) when you "go back" to legacy only schemes in 2023
18/ The main exceptions to this will be
i) pyschs with MHO status who can get "double years" back with McCloud so their AA charges may go up.
ii) people who came out of the scheme and may be able to retrospectively go back in under "contingent decision" on a case by case basis
19/ So please don't ignore your 21/22 AA tax liability because of the McCloud legal case - even if you think your AA tax charge may disappear if you revert to the old schemes.
It REMAINS unclear what will happen with AA if you choose to come back into 2015 schemes at retirement
20/ With any AA charge you have basically two choices
i) Pay the charge with your self assessment from cash (from taxed income)
ii) Pay the charge using a "scheme pays loan"
I've covered applying for scheme pays before in this video (for 19/20)
21/ Because of McCloud & the fact your charge may go down/dissapear in 2023 (although UNCERTAIN what will happen if you choose 2015 for the remedy period at retirement) I suspect more people will be inclined to use "scheme pays" this tax year as the loan amount can be changed
22/ In summary - no-one is going to magically send you a bill for your AA charge
YOU need to request a savings statement if you dont have one.
YOU need to calculate if you have a charge.
YOU need to tell HMRC you have a charge.
YOU need to pay the charge or use "scheme pays"
23/ Penultimately 21/22 may be first or biggest AA charge. 2 factors for this - a bigger than normal difference between inflation Sep 20 (0.5%) & Sep 21 (3.1%), & similarly with the pay "award" (cut)
But current tax year (22/23) will be MUCH worse #CPIdisconnect
24/ Finally I can't in good conscience do a thread about AA without saying what a thouroughly stupid tax this is. It's a completely inappropriate tax in the context of a DB scheme.
Tax relief is removed by steep tiering, & removed again by AA, again by LTA = pension theft
25/ Can't emphasize enough how important this is- *EVEN IF HAVE WRITTEN RECENTLY*
New PM, new chancellor, & a new SOS - your MP needs to know how its affecting YOU / YOUR SERVICE / YOUR RETIREMENT PLANS
Please take 5 mins - and take time to customise it
1/ NEW & IMPORTANT: Quarterly NHS pay data updated 27/6/24 👇 In BREAKING NEWS NEW charts now show ALL SECTORS have reached #FullPayRestoration (though NOT, of course, the NHS)
2/ You'll notice when ministers are in the media, they often talk about how hard "your viewers/listeners" have been hit by inflation. But what we need to do is separate fact from fiction (aka LIES), it was 👇excellent @jburnmurdoch @FT chart that really showed this well last year
@jburnmurdoch @FT 3/ But its not just government ministers gaslighting NHS workers that they have no right for their pay to keep up (like everyone else's), it was also so-called "independent" DDRB👇
Apparently doctors & dentists should not be protected when "its not taking place in other groups"
2/ You'll notice when ministers are in the media, they often talk about how hard "your viewers/listeners" have been hit by inflation. But what we need to do is separate fact from fiction (aka LIES), it was 👇excellent @jburnmurdoch @FT chart that really showed this well last year
@jburnmurdoch @FT 3/ But its not just government ministers gaslighting NHS workers that they have no right for their pay to keep up (like everyone else's), it was also so-called "independent" DDRB👇
Apparently doctors & dentists should not be protected when "its not taking place in other groups"
1/ *VERY* concerned about the quality & type of information coming to @BMA_Pensions members to allow them to make choices in regards to McCloud.
For members who chose to move to 2008 (so called "choice 2", we saw the first of this information last week - deep dive 🧵
Pls RT
2/ OK first of all, lets rewind. Pre 2008 we were all in the 1995 section. For most members that had a fixed retirement age of 60, and gave us "80ths" of final salary. Work 40 years, get 40/80ths or 1/2 of your final salary. Simple. Back in the day contributions were 5% or 6%
3/ As we all started to live longer, government felt this was unnafordable as we were spending longer in retirement. So they introduced the 2008 scheme
- 1/60th not 1/80ths
- Retire at 65 not 60
- So called "Reckonable" pay - based on best of 3yr in last 10, inflation adjusted
1/ NEW: Consultation response out & confirmaiton of rates 1st April '24 , dropping the 13.5% tier.
Grateful government listened to concerns about feezing the top tier so tiers WILL uplift with CPI, not creating (another) "fiscal drag" for higher earners
2/ This repesents a change from previously announced where tiers were to be uplifts of AFC awards (largest employee group). I had suggested a "double lock" of greater of CPI or announced awards, which was supported by the scheme board, but sadly rejected by government
3/ @BMA_Pensions again raised concerns that the @nhs_pensions has a higher contribution rate than many public sector schemes, and has the steepest structure.
We continue believe it should be much flatter, or flat, in a CARE scheme will all paying the same for the same £1 pension
1/ NEW & BREAKING: @instituteforgov supported in analysis by @CIPFA issue an UPDATED pay erosion chart for NHS workers including @TheBMA doctors & @theRCN nurses👇
WHY is this so relevant: This now includes pay data released in '24 to Sept '23 INCLUDING 6/12 of 23/24 pay awads
- pay erosion in NHS from austerity
- uses CPI preferred by gvmnt & some economists
- crucially shows 6/12 effect of DDRB 23/24- starting basis for all pay deals (i.e. not a lot)
@RobLaurensonD4P @_VivekTrivedi @TheBMA @BMA_Consultants @BMA_JuniorDocs @Doctors_Vote 3/ So this chart uses the latest available data (released in 2024) includes the latest pay deals
Despite this @BMA_JuniorDocs down a STAGGERING 25.0% in real terms
REMEMBER: This is using CPI, not RPI, which would produce a higher figure (RPI includes mortgage interest etc)
1/ *Deeply* worrying from @RishiSunak @10DowningStreet on @bbclaurak
Watch the clip in full 👇and pick out the blatant untruths - its so unbelievable they went unchallenged Laura K?
Apparently "The government has now reached resolution with every other part of the NHS. ....
2/ "Nurses, midwives, paramedics, consultant doctors, specialty doctors most recently. "
"So EVERY other part of the NHS workforce, and I'm grateful to them for everything they're doing, has reached a resolution with the government on a reasonable, fair pay settlement. "
3/ According to our PM
"The only people that haven't are the junior doctors."
How can this go unchallanged?
To be clear @BMA_Consultants (nor @BMA_SAS) have *NOT* "reached a resolution with government on a "reasonable, fair pay settlement"