“It is important to realise that these tax bills are not just a problem for the NHS, although it is only there that the impact has been felt by the average person. The issue is one of over-complexity and ill-conceived tinkering with the pension tax relief regime.
“The obvious and most popular action would be to simply abolish the taper, and to call for a wider review into pension tax relief in general. The whole intention of pensions simplification in 2006 was to get rid of the complexity and manage costs via two simple allowances, and I can see no reason why we cannot return to that aim.
“Since 2006 there has been progressive tinkering with the rules based on short-term objectives, which have put us back to a position where tax relief is almost impossible for most people to follow and has resulted in a number of unintended consequences such as the impact on the NHS. Such a review would allow the Government to look at ways of recouping the revenue lost by the abolition of the taper and making the system fairer and more sustainable at the same time.
“An increase in the threshold will mean fewer people are impacted by the taper but probably won’t remove the complexity for those who are. This issue really came to light when NHS doctors were shocked to discover they were financially worse off by working overtime. However, I have no doubt there will be many doctors who will be impacted at the £150,000 threshold so is this really ‘problem solved’ or just goalposts moved?”
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