Consultants at Derby and Burton’s hospitals are actively turning down taking on extra patients and working more shifts to avoid larger end-of-year tax bills.
The revelation came to light at a meeting of Derbyshire’s four Clinical Commissioning Groups (CCG) on Thursday 28th March 2019.
Board members said that the issue had been stymieing efforts to meet a rising demand for health services at the Derby and Burton hospital trust (UHDB). They said it was an issue across the entire NHS and the rest of Derbyshire – and was not specific to Derby and Burton.
Hospitals and other NHS organisations often have to hire specialist consultants to either plug a temporary vacancy or to help them meet rising demand – for instance over winter and flu season. Consultants are paid much in the same way as freelancers, by how many days or hours they work, instead of through a fixed annual salary. They are often the highest-paid among most NHS organisations, with annual salaries believed to start from around £77,000.
It has now come to light that consultants are turning down further work to avoid pushing their earnings into a higher tax bracket – leading to a larger end-of-year bill in the tens of thousands.
It is thought that the earning levels in question relate to sums in the region of £150,000 per year up to £210,000.
NHS employees are pushed into a higher tax band if they breach the lifetime allowance limit of £1.055 million in pension earnings – this is forecast based on annual earnings. Higher earners are also now entitled to a smaller amount of tax breaks, leading to a larger bill at the end of the year.
A large part of these higher tax payouts relates to pension contributions.
The British Medical Association, the trade union for doctors and medical professionals, has called for the brackets around pensions and related tax bills to be altered. It says that some 2,400 consultants in England had said that they were considering early retirement due to breaching the lifetime pension allowance – leading to “excessive rates of taxation”. The changes, which have led consultants to reduce their workloads and contemplate early retirement, were introduced by the government in 2016.
Before 2016 very few NHS staff were affected.
The Financial Times reports that thousands of NHS staff are receiving a tax “penalty” — often as a result of taking on extra shifts to help manage the workforce crisis in the health service. It says that “almost all consultants and GPs in the UK are at risk” of hefty tax charges – amounting to more than 100,000 doctors.
An anonymous emergency stroke consultant told the Financial Times: “Due to the pensions tax risk I no longer offer to cover gaps in the weekend rota.”
This week, Professor Ian Shaw, a lay member of Erewash CCG, said: “Consultants are stopping taking on further work in order to avoid a larger tax bill in the region of £20,000 to £30,000 at the end of the year.”
Craig Cook, director of contracting and performance for the Derbyshire CCGs, said: “This is a phenomenon that we are aware of and it is something we are taking action for a solution on.”
Dr Buk Dhadda, a Southern Derbyshire CCG board member and Swadlincote GP, said: “This is an issue across the whole of the NHS. It is an issue we need to keep an eye on.”
Dr Magnus Harrison, executive medical director for UHDB, said: “These changes will have no adverse impact to the level of patient care offered at University Hospitals of Derby and Burton.”
A spokesman for the Derbyshire CCGs said: “As highlighted at our governing body meeting, this is a national issue across the NHS and is not specific to hospital trusts or Derbyshire. We’re monitoring this in the county and are aware that providers are in negotiation to put capacity back into the system.”
A Department of Health and Social Care spokesperson said: “The are over 15,000 more doctors on our wards since 2010 and their dedication ensures patients get excellent, safe care. While their pension scheme ranks among the best available, it is important we retain and maximise their skills and as part of the Long Term Plan we will publish a Workforce Implementation Plan later this year which will consider what measures are appropriate to achieve this.”