Budget 2020 ends pensions ‘tax trap’


12 Mar, 2020

Budget 2020 ends pensions ‘tax trap’

During Wednesday’s budget, British chancellor Rishi Sunak announced a tax cut as part of the government’s plans to remove the pensions “tax trap”. 

The “tax trap” previously resulted in a number of senior doctors refusing to work extra hours, amid the spreading epidemic. 

Following the budget’s announcement, those receiving over £110,000 annually will enjoy a tax cut due to changes to pension tax rules.

The coronavirus outbreak has created a high demand in hospitals with patients needed to be treated and checked for symptoms. 

However, because of previous laws doctors and other workers in hospitals did not want to work more shifts as any extra earnings would have their pension pot taxed. 

Doctors who worked extra shifts saw additional tax charges, which reportedly amounted to around £100,000. 

The government is “removing anyone with income below £200,000”, Sunak said. 

“In effect this means only those with earnings over £240,000 will be subject to an erosion of their annual pension allowance rather than it kicking in for those with total earnings over £150,000. This is therefore a de facto tax cut for many high-earning professionals,” managing director Jason Hollands told The Guardian. 

Additionally, the British Medical Association welcomed Sunak’s announcement, stating that it has “fought tooth and nail for 18 months” to try and end the pensions taxation problem. 

It said, “The vast majority of doctors are now removed from the effect of the taper and will no longer be in a situation where they are ‘paying to go to work’.”

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