That this House has considered NHS pensions, annual and lifetime allowances.
I begin by declaring an interest, because anybody who has been in the parliamentary pension scheme is affected by annual allowance and lifetime allowance. Therefore, some of the things I say may reflect on me and maybe other hon. Members, so I suggest they make a declaration as well—
James Gray (in the Chair)
Order. The hon. Gentleman may be right to say that all hon. Members may be affected by that matter, but for each individual to have to make that declaration would, I think, be otiose.
Sir Robert Syms
Thank you, Mr Gray. This is an important subject, and the more I learn about it, the more I realise its implications for the national health service. I had originally been told that the Treasury would respond to the debate, but I understand that the Department of Health and Social Care has manfully stepped up to the plate—the first example I have seen of a hospital pass to a Department.
The subject has devastating implications for the NHS, dental services and many other services in this country unless it is addressed by the Government. When the coalition Government came into office in 2010-11, they were quite right to reduce the amount of money that could be put into pension funds. At that time, someone could put £255,000 into a pension fund tax free; clearly, if they had such resources, it was unfair on the lower paid. The Government moved to reduce the tax leakage by reducing a number of the allowances.
The problem today is that the Government have drawn the allowances too tight, and in 2015-16 they also introduced a taper to the annual allowance. All that is having a pernicious effect on the NHS and creating what the British Medical Association has called a “perfect storm”. The lifetime allowance, which is just over £1,055,000, is such that most senior doctors and general practitioners get pulled into additional tax, paid at 55%. That raises the question whether they should continue working or retire early; there is a lot of evidence that members of the medical profession are deliberately retiring early because of the implications of working longer.
The annual allowance of £40,000 is creating problems of supplementary tax bills, which are falling at the doors of consultants, doctors and senior nurses. That £40,000 is made up of the increase in the fund and contributions, in a slightly convoluted formula, but the introduction of the taper and the way that it operates cause particular havoc. For higher earners, a strict regime applies to annual contributions, which is known as tapered annual allowance. It applies to people who have both adjusted income over £150,000 per year, which is total taxable income plus the real growth in value of pension rights over the year, and threshold income above £110,000 per year, which is essentially total taxable income, but net the value of any employee pension contributions.
Where an individual ticks both boxes, for every £2 of adjusted income that they receive above the £150,000 level, their annual allowance is reduced by £1. This means that those with an adjusted income of £210,000 have their annual allowance tapered down from £40,000 to £10,000, the lowest level to which tapering can reduce the annual allowance. That tapered allowance was introduced in 2016-17. The ability to carry forward unused allowances for years before the taper was enforced has so far helped to dampen down its impact, but in 2019-20, carry-forward will be from no earlier than 2016-17, when the taper came into force. That will reduce the number of people with significant amounts of underused annual allowance available, and as a result the taper will bite rather more than in earlier years.
If we look at the figures, we see the number of people who exceed annual allowance or hit the taper multiplying each year, pulling many more people into the system. Many senior doctors earn enough money from their core hours plus additional shifts to be potentially affected by the tapered annual allowance. In addition, because of the relative generosity of the NHS pension scheme, pension rights can be built up quite quickly, especially for those who have experienced a step-up in pension rights because of a promotion. Paradoxically, in most cases overtime shifts are not pensionable. That means that a doctor can find that, by working more, he or she has built up no extra pension but, because of the operation of the tapered annual allowance, has reduced the amount of pension that he or she can build up within the tax relief limits.
All that leads to more complexity within the system. It is extremely difficult for someone to work out whether they have an annual allowance issue; that is true for any high earner, but may be particularly true for those in the NHS, because they have rights under different sections of NHS pension schemes—for example, a final salary pension and a career average pension. Those rights are tested against annual allowance, but a negative accrual in one scheme cannot be set against a positive accrual in another scheme.
My hon. Friend is making an excellent speech on an area that is technical, but has enormous implications. I have been contacted by a consultant in emergency medicine at Gloucestershire Hospitals NHS Foundation Trust, who has indicated that because of the perverse incentives of this scheme, he will not be taking on an extra shift and out-of-hours work, which reduces that vital expertise. Does my hon. Friend agree that we must turn this around so that we have frontline medics doing what they should be doing—caring for our patients?
Sir Robert Syms
Almost anybody I talk to in any hospital anywhere has an example of the impact of this additional taxation biting, and its impact on working methods. I know my hon. Friend has tried to get a debate on a similar subject, because we are ultimately talking not about consultants, but about the patients and the impact this has on delivering services.
For defined benefit pension rights, the test against annual allowance is complex. The growth in rights over the year must be adjusted to strip out any increase that simply keeps pace with inflation, and is then multiplied by 16 added to any additional lump sum accrual before being tested. Whether the tapered annual allowance applies depends not just on whether someone’s adjusted income is over £150,000, but on whether their threshold income is over £110,000. These two measures are quite different, and adjusted income in particular is calculated in a very complicated way.
That creates unpredictability. A tapered allowance works by using income from the current year to determine the size of the annual allowance for the current year. Many NHS doctors work extra NHS shifts and many do private work; they may have little idea what their income for the year will be until very late in the year. Sometimes, NHS trusts get additional money released at the end of the year, leading to more operations. Sometimes, NHS trusts pay at a rather slow rate, and they may pay in a different year from that in which an operation was undertaken. As a result, doctors who take on a lot of extra work late in the year can suddenly find they have an annual allowance issue.
There is also a cliff edge issue. Although the tapered annual allowance result is a gradual reduction in annual allowance for each £1 of adjusted income over £150,000 per year, the fact that the whole system switches on abruptly for threshold income above £110,000 can create a violent cliff edge effect. For example, those with threshold income that is 1p below £110,000 can effectively ignore the tapered annual allowance, but those with income that is 1p above it can find themselves caught with a rather large tax bill. For the latter group, not only does each extra £1 attract income tax at 40p and a loss of personal allowance equivalent to another 20p in the pound, but they can suddenly face a big drop in their annual allowance.
Some people can be worse off overall by working an extra shift. I have heard testimony to that effect from many doctors who say they have done additional work and ended up worse off.
I congratulate my hon. Friend on securing this debate. I hope he will not mind my taking the opportunity to plug the event I am hosting with the BMA next Wednesday between 4 pm and 6 pm, which will be a great opportunity for MPs to meet many consultants with stories such as this, and to find out more information about the problem. Does he agree that, because this matter is so complex, it is important for MPs to come along and speak to the BMA, and speak to their local senior consultants, to really understand the impact this is having on the ground?
Sir Robert Syms
I thank my hon. Friend for his contribution. This is an area that people start to get interested in only when they start thinking about retirement. Then they realise how complicated the retirement rules are. This issue is upsetting many people who work in the NHS because of the impact it is having.
A survey of GPs to which 46% replied—354—found that their average tax bill owing to the tapered allowance was £18,500, so we really are talking about considerable sums of money being levied on doctors, many of whom do not expect it and suddenly get into arrears. Dr George McInnes, radiologist at Poole Hospital, said to me that most of his radiologists are contracted for 10 sessions, with most working 11 or 12 as a matter of norm to keep the throughput going. However, as is the case in most hospitals, he now finds it terribly difficult to get them to do more than 10, and when people come to review their contracts, they ask to do less work, rather than more, because of the impact of the pension arrangements.
The real problem is that most of the people affected have done years of training and have years of experience—they are the super strikers of the NHS; the team leaders—and despite tax bills have a loyalty to their hospitals and teams and continue working. However, year on year, they find themselves penalised for working. As rational people, they decide to play golf or to spend more time with their families or with Netflix. That is logical, and the Treasury is deterring many people from doing what they have trained for their whole lives to do. The letters, emails and phone calls I get from doctors do not say that they want to work less. They actually want to work more, but they do not really feel that they should work more and be worse off as a result.
The Government have put additional resources into the NHS, and we can argue about whether it is enough or not. However, the key point from the Treasury and the Department of Health and Social Care was the importance of productivity in the NHS, which we can get only if the people within the service are actually able to deal with patients and the issues before them. If, because of the tax issue, people work less, the only way around that—apart from locums, if they can be recruited —is to recruit more people to do fewer operations. That is not increased productivity; that is reduced productivity. If we want to use these people, we have to set a tax system that is proportionate and sensible.
It is not only the NHS. The British Dental Association says the same thing: people are retiring early and are more averse to taking on NHS patients. The consequence is the problem that we are now starting to see, which will get worse and worse. I know that the Department of Health and Social Care understands the issue; I have talked to the Secretary of State. I think the Treasury sort of understands that there is a problem, which is why I think it indicated that it might give additional resources to the NHS. However, the problem is that the only way out of this is to get rid of the taper, because its impact on the way people work is so detrimental to the NHS. Even if we take into account wider issues and other areas, I cannot see how any scheme can be brought in to ameliorate its impact.
I commend the hon. Member for Poole (Sir Robert Syms) for bringing this important debate to the Chamber. I did not intend to speak, but I feel obliged to do so now. I understand why this scheme was brought forward. It is not the scheme that I have problems with but its implementation and the unintended consequences, which have already been raised.
The situation in the NHS is complex. We have three NHS pension schemes, and it is really difficult to work out; I am part of two of them and I struggle to work out what I am supposed to be doing. We understand that it is difficult. The taper comes in at £110,000. The Chancellor told me in the Chamber that it is £150,000, but it is not. This is important, because although these wages seem a lot to some people, they are not that high compared with those of senior businesspeople. The taper will affect people such as consultants, GPs and medical academics. These are our leaders, and we need to ensure that there is succession planning. If these people leave abruptly because they realise the tax implications, there is no chance for succession planning.
The hon. Lady is making a good speech. It is true that senior consultants are often relatively well paid, but they cannot afford sometimes four, five or six-figure tax bills suddenly arriving on their doormats, which provide the most profound disincentive to their doing what they want to do: care for patients.
Absolutely. The hon. Gentleman makes an excellent point, and much more eloquently than I could. These things are coming in at the end of people’s working lives, and it is difficult for people to budget for them when they do not know what will land on the doormat. When we enter working life and take on board pensions, we know what we are signing up to. These changes are being made in the latter stages of people’s working lives, so it is really difficult to budget and plan for them.
Several constituents who work at the Aneurin Bevan University Health Board in my constituency have written to me to say that they will finish work early or cut down on the number of sessions because of these punitive tax bills. Although obviously the health service in Wales is devolved, pensions are not, so it is important that we look at this issue in the round and across the UK. We need to make sure that we retain these doctors across the board.
I commend the hon. Member for Poole for introducing the debate. I ask the Government to look again at this situation.
I add my congratulations to my good friend, my hon. Friend the Member for Poole (Sir Robert Syms), on securing the debate, kicking things off and so clearly setting out the challenge that we face. In recent weeks, we have worked as a tag team between Winchester and Poole— earlier this month I raised the issue in the Chamber during an urgent question on the NHS people plan, which is a logical place for the subject to sit, and he, obviously, is leading the debate today—and that is entirely appropriate given that we are relatively near constituency neighbours and that many of our constituents work in Winchester, Bournemouth, Poole and Southampton NHS trusts and do shared work across those trusts.
I must say that the debate should be responded to by a Minister from Her Majesty’s Treasury. That is no criticism of the excellent hospitals and workforce Minister, who until very recently I was honoured to call a ministerial colleague in the Department of Health and Social Care. This is the first debate being responded to by a Minister from the Department of Health and Social Care that I have spoken in since I left office. However, seeing as we have a Health and Social Care Minister here, I will focus my remarks on patient care, which my hon. Friend the Member for Poole has discussed.
Over the past few weeks, I have spoken on a number of occasions to the chief executive of Hampshire Hospitals NHS Trust, Alex Whitfield, and I have spoken either through her or directly to numerous consultants and senior clinicians about this challenge. I am aware how serious it is, both for the individuals adversely affected—as we heard from my hon. Friend the Member for Cheltenham (Alex Chalk) and the hon. Member for Newport West (Ruth Jones)—and for patient care and wellbeing, because the NHS is about its people if it is anything.
When I first spoke to my local trust about this, the chief executive told me that
James Gray (in the Chair)
Despite his late arrival to the debate, I call Mr Paul Sweeney.
9:57 am
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
Thank you, Mr Gray, for your kindness in letting me participate in the debate. It is, as always, a pleasure to serve under your chairmanship. I apologise for my late arrival.
I congratulate the hon. Member for Poole (Sir Robert Syms) on securing the debate, and the hon. Member for East Renfrewshire (Paul Masterton) on also trying to press the Government on this matter. I have come to the debate because two consultants in my constituency came to me about this issue and I thought it important to communicate their views directly to the Minister. I hope that actions can be taken, because this is clearly a classic case of the law of unintended consequences.
One of those constituents, Dr Urquhart—the other was Dr Hepburn—wrote to me. Dr Urquhart has been a consultant in the NHS Greater Glasgow and Clyde area for nine years and is employed on a 48-hours-per-week, full-time contract, which includes being on call. He says that, following this change,
“I will have to drop the number of hours per week I work and also not take on any extra shifts which are paid…to cover rota gaps and waiting list initiatives which reduce the penalty to NHS GGC for waiting list breaches.”
In a sense, the change is penalising the efficiency of the NHS and introducing further costs to the health service that could be avoided. The consultant continues:
“Due to reduction in annual allowance for pension growth, the introduction of the tapering of the annual allowance coupled with the introduction of the 2015 NHS pension scheme, a growing number of doctors are facing four, five and six figure tax bills on top of their income tax and national insurance contributions. In my case this means that in the next year I expect a huge tax bill as in October 2018 I received a 10 year pay rise and will receive a large tax bill.”
He believes that it will impact on all consultants in NHS Greater Glasgow and Clyde and beyond.
It appears that the only way in which Dr Urquhart can avoid these large regular tax charges, which may amount to tens of thousands of pounds a year in addition to his income tax payments, is to reduce the hours that he works for the national health service. He fears that many of his colleagues will be forced to accept the same conclusion. He and his colleagues often go above and beyond to ensure that services can continue running safely and effectively, but there are limits to what can be reasonably expected of even the most dedicated doctors.
As a result of the current pension and tax regime, Dr Urquhart is effectively paying to provide additional services to the national health service. He hopes that these separate changes to tax and pension arrangements were an unintended consequence that was not appreciated when they were first introduced, that the resultant negative effects on the NHS workforce were unintended, and that the Treasury will undertake to correct them. Like many services, his department relies on consultants working regular overtime through additional programmed activities.
I declare an interest: I spent more than 30 years as a consultant in the NHS and am married to a GP, so naturally the issue affects us. However, it also affects many of our colleagues.
The first thing to hit was the lifetime tax allowance changes. In my husband’s practice, I saw GPs being driven out at the age of about 57 or 58. They had had no intention of retiring early, but they had been warned in their annual meeting with their accountant that, because of the taper, they would suddenly reach a high marginal tax rate of well over 50%, which naturally is not very attractive. The result, exactly as other hon. Members have laid out, is that we are losing the people with the most expertise—the people who train the new people.
It is important that we do not get carried away into thinking that the NHS is about machinery, buildings or gizmos and gadgets. Every one of those gizmos and gadgets is used by a person. It is people in the NHS who care for, treat and diagnose people. If we do not have the workforce, all the waiting times that we like to stand up and talk about will be completely shot. The workforce issues that all four UK nations face are being made worse by these problems.
Many people may think, “A £1 million pension pot allowance? What a great problem to have!” It is a great problem, but the difficulty is that in general practice, GPs reach a high salary quite early, unlike in a hospital where becoming a consultant takes 15 or 16 years, so people have taken out added years and bought extra service. Because we graduate late, it ends up being very difficult to work for 40 years and have a half-salary pension. We thought about buying added years—we looked at it twice, but we could never afford it.
It is the same issue that arose with the Women Against State Pension Inequality Campaign and with Hewlett Packard, Magnox and all the others: people are expected to commit to a pension in their early 20s, but when they get to the other end, the goalposts have moved. It hits them when they can do nothing about it but bail out—and that is what they are doing.
Sir Robert Syms
A BMA consultant told me that an actuary has done some modelling and found that the penalties are so severe that somebody who works 48 hours a week and has to borrow money from their pot at the end will have a lower pension than someone who works 24 hours a week.
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We in this House want patients to get the best service, and sometimes we have to pay people to get the best service in the national health service. Most consultants or senior nurses have trained for years and are dedicated to their patients, and all they want to do is to turn up and work. The Government have put money into the NHS to allow operations to take place, but perversely our system of taxation on pensions, which was probably drawn up to stop city slickers avoiding tax, is impacting on a major, important public service and will lead to longer waiting lists, meaning people—who, if not in pain, will be very uncomfortable—waiting to be dealt with.
We all want people to be dealt with, doctors to be happy and the NHS to work properly. We need the Treasury to get out of the way on this one, because it is causing problems.
“the pension situation is having a significant impact on our people”
in Winchester and Basingstoke, and:
“The NHS scheme is particularly affected by changes to the pension tax system relating to the Annual Allowance and the Life Time Allowance.”
She is not wrong when she says:
“These changes are complicated and for individuals in the NHS defined benefit pension scheme the implications are not at all transparent.”
That point was well made by my hon. Friend the Member for Poole. She says:
“As a result, individuals are receiving unexpected tax bills of tens of thousands of pounds. It particularly impacts on consultant doctors, senior nurses and managers. Individuals are making different decisions as a result of these bills.”
I will pause on that point, about the senior NHS staff on whom this is having an impact.
I was privileged to be part of a Department that, under the previous Secretary of State, who is now the Foreign Secretary, and under the current Secretary of State, has delivered a record funding settlement for the NHS—£20.5 billion a year. I saw that play out in Winchester a few weeks ago, when I opened the new emergency department of the Royal Hampshire County Hospital in the heart of the city. That is excellent news. In my opinion, the challenge for the NHS will not be too little money, as a result of the settlement and the excellent long-term plan, but having the right people, who can spend that money in the right way to deliver the patient care outcomes that we want. If we are losing senior people, we have a senior problem.
As well as speaking to the leadership at my local trust, I wanted to find out more from the horse’s mouth, so I asked members of the local clinical community to come forward with their own stories and, if I may, I shall put a few of them on the record. One consultant set the scene very clearly. He told me that the issue is the annual allowance pension tax taper, which I will come back to, and the inflexibility of the NHS pension, which is landing consultants with huge tax bills for doing extra work on top of their contracted hours. The consultant was clear—and I agree, not least as a former Health Minister—that that extra work keeps the NHS running in the face of ever increasing demand.
I was told that, in certain circumstances, the marginal tax rate on earnings for the extra work is greater than 100%, which means that senior doctors working in my local hospital are in effect having to pay to do extra work. They are some of the most committed individuals in public service in our country, and I have had the privilege of working closely with many of them, but that is taking things a bit too far. It is clearly not a sustainable situation and, now that the huge tax bills are landing on doorsteps, it is causing a huge change in the behaviour of consultants at all levels in my local trust.
Another consultant told me that she has been an NHS doctor for 19 years and has worked as a consultant in my local trust for the last seven. She is employed on a full-time contract, with additional out-of-hours cover. Moreover, she regularly covers additional lists and shifts that require cover, sometimes at very short notice. She could not have been clearer with me that she is happy to provide that cover in the interest of safe patient care, which is of course what this is all about, as everyone has said. However, she has now been hit with a £30,000 tax bill, and she tells me that the only way she can avoid regular large tax charges, which may be for tens of thousands of pounds a year and which of course are in addition to her not insignificant income tax payments, is seriously to reduce the hours that she works for the NHS and not to take on any additional duties. As has been said, that goes to the heart of the issue. The consultant fears, as does her MP, that that is the conclusion that many of her colleagues will be forced to accept.
Let me again give some facts from trust level. Hampshire Hospitals NHS Foundation Trust recently ran a survey on the pension issue and received a healthy 2,500 responses. It is the case that 42% of all the respondents have reduced their work commitment; 20% have avoided promotion; and, critically, when the people were asked who might change working practices in the future, the figure goes up to 80%, including 33% considering early retirement and just over a quarter considering leaving the NHS altogether.
I have no doubt that the changes were introduced in good faith. They are aimed at top rate earners, as my hon. Friend the Member for Poole said, but in practice this has had a damaging effect on key people in the NHS, and if it is not sorted quickly, we will see that escalate further, and it will become harder and harder to retrieve the position. The suggestions put to me for fixing it include removing the annual allowance tapering. When I spoke during the urgent question earlier this month, a number of consultants from across my local trust and Poole and Southampton contacted me. They are pleased that the consultation, which I am sure my hon. Friend the Minister will say more about, is imminent, but what they fear from that is that the 50:50 fudge will just not work. We need wholesale reform, and the taper really does need to be scrapped.
In addition, I ask the Minister whether it is worth considering removal of the annual allowance taper for public sector workers. Of course, that is a decision not for him but for the Treasury and for whoever is inhabiting No. 10 in a few weeks’ time—I may be well placed to influence that, or I may be not at all placed. The point is this. If we want to make the NHS a great place to work, why not provide a tax benefit to working for the public sector—one of the biggest employers in the world? That is food for thought.
Let me finish in the same way as I have tried to make the whole of my contribution this morning—with a real-life example from Hampshire Hospitals NHS Foundation Trust of what we are seeing at trust level. In Winchester, like everywhere else and as I have set out, the Royal Hampshire County Hospital, one of the three hospitals in the trust, relies on many doctors and other senior staff doing additional sessions over and above their timetabled work in order to fill gaps in the medical workforce. Locally, we have seen that especially in radiology, where the additional sessions are used for radiologists to review scans and write the reports about what they see. The reporting of scans is clearly required so that patients can be told what the scan shows and clinical staff can work with patients on the most appropriate treatment.
My good friend from the Scottish National party, the hon. Member for Central Ayrshire (Dr Whitford), whom we will hear from shortly, and I spent many hours in this Chamber when I was the Minister with responsibility for cancer, and I was extremely proud to get the 75% stage 1 or 2 diagnosis ambition into the long-term plan, as announced by my right hon. Friend the Prime Minister. That is critical: early diagnosis is cancer’s magic key, as has been said by me and others many times in this Chamber. If we are to get anywhere near realising that ambition, we have to have a functioning, improved and expanded radiology service. Any reduction in radiology and the diagnosis stage will have an adverse impact and make that ambition unattainable, in my opinion. I am reliably told by my local trust that it has seen the backlog of scans waiting to be reported growing each week over the last few months. That concerns me greatly. It is of course just one department—it is an area that I know a little about—but it is a sobering example and one that we simply cannot ignore.
I shall finish by saying that we must act. I have so much respect for this Minister, but we need the Treasury to take this issue seriously and we need the next Prime Minister to act. If we do not, it will only get worse. We need to grip it, and we need to grip it fast.
Unless the Government take action, many doctors like Dr Urquhart will be left with no option but to reduce their working hours significantly. Other consultants in the national health service in Glasgow are being advised to take early retirement to avoid these taxes. That will exacerbate an already acute workforce crisis in NHS Greater Glasgow and Clyde and seriously jeopardise the sustainability of the national health service. The impact on Glasgow’s Queen Elizabeth University Hospital —the largest medical facility in Europe—alone must not be understated. The topic is frequently discussed by his colleagues, many of whom feel the same.
I hope that the Minister will take cognisance of the issues raised by many consultants and the British Medical Association. Fundamental reform of the tax issue, particularly by scrapping the tapered annual allowance, is urgently required to prevent a workforce crisis. I hope that he will recognise the scale and immediacy of the risk to the national health service and that he will undertake to take our representations back to the Government and ensure that the problem is rectified as a matter of urgency.
The lifetime tax allowance limit has already driven out consultants and GPs before the age of 60, but what makes the problem much more acute is the tapering annual tax allowance. As we have heard, it was introduced in 2010 at more than £250,000 to avert tax avoidance and gaming of the system. Senior medics in the NHS are probably the highest-paid people who do not run a business. They are on pay-as-you-earn, so they cannot play the game of writing off this, that and the other or paying themselves in weird ways; they just get their payslip, and the tax is taken. They are not in the tax avoidance game that was perhaps thought of when the taper was introduced. The commercial sector is defined contribution, not defined benefit; it is how the limits interact with the NHS, and probably other public service schemes, that causes the problem.
The annual allowance was reduced to £50,000 in 2011 and then to £40,000 in 2014. For those caught by the taper, the allowance can go right down to £10,000. The threshold is £110,000—not £150,000, which was the impression that the Chancellor gave at Treasury questions on 21 May. People hit a cliff edge, as hon. Members have highlighted: all of a sudden, they are caught in a system where they are taxed over and over on the same income. It particularly affects consultants, who are paid about £110,000 or more, and full-time GPs.
Those who have been caught out and hit by these bills are now talking to their colleagues. The result is that people are refusing promotion and refusing to take on the extra duties that are required in the NHS, such as becoming an education director, a manager of junior doctors or a clinical lead, because anything that could bring in extra income for extra work could suddenly push them over the threshold. Doctors cannot see in advance whether they will be hit, so they cannot manage things over the year.
Some of the bills that arrive have been absolutely horrendous. The average bill is £18,500, but many are getting towards £100,000. No one has that kind of amount lying around in their bank account, however much they are paid. Even trying to pay the bill has caused terrible problems. People are paying it either from already taxed income or by taking a loan on which they will have to pay interest—or they are using scheme pays, borrowing from their pension pot to pay off their bill and then having to pay the money back at non-commercial rates. That still reduces their final pension pot, because the money has technically not been in it for the same length of time.