Thousands of doctors, financial advisers and retirement savers are flocking to sign an online petition calling for the government to scrap the controversial tapered annual allowance that caps pension contributions for high earners.
The tapered annual allowance chokes pension contributions for anyone earning more than £150,000 a year.
Instead of letting them pay £40,000 a year in to a pension like most other earners, they lose £1 of their annual allowance for every £2 earned over the trigger figure of £150,000 until the allowance reaches £10,000.
The taper has impacted doctors and NHS workers offered extra hours to reduce waiting lists, because if they take the work, their incomes breach the trigger limit and increases their tax bills.
They also have a problem with keeping within the lifetime allowance (LTA) of £1.055 million.
Call to scrap tapered annual allowance
Breaking both saving ceilings can lead to HM Revenue & Customs charging fines and other penalties that make earning the extra cash financially unviable for high earners.
Mark Cheetham, a consultant at Shrewsbury & Telford Hospital NHS Trust has launched the petition on the Parliament web site.
After 24 hours, more than 6,000 signatures have been collected.
At 10,000 signatures, the government must respond in writing, while if the petition reaches 100,000 signatures, the petition is debated in Parliament.
Cheetham is calling for the scrapping of the tapered annual allowance.
Punitive tax bills
“Recent changes in pension taxation have reduced the annual allowance which can be put into a pension to £40,000 a year. In 2016, tapering was introduced which can further reduce the annual allowance to £10,000,” said Cheetham.
“The combined effect of the tapered annual allowance and inflexible public sector pension schemes is having a catastrophic effect on retention and productivity in the public sector. In particular in the NHS, where consultants are not able to afford to do extra work for fear of a punitive tax bill well in excess of any income earned.”
The government launched a consultation on the issue before the new Prime Minister Boris Johnson took office.
The British Medical Association, the trade body for doctors, has written to Johnson warning doctors are ready to give up their jobs if he does not fix the problem.