NHS Employers, an advisory body to NHS trusts, has warned of the potential tax avoidance risks for doctors who set up limited liability partnerships (LLPs) as a way of mitigating their problems with the pension tax annual allowance.
In its Pension tax guidance for employers: Local measures to support staff and service delivery during the 2019/20 financial year, published on 2 September, the body has outlined a number of options, including using ‘existing flexibilities’ to enable employees to remain in the NHS pension scheme. These include:
managing pensionable pay by determining certain elements of pay as being non-pensionable;
using non-pensionable local clinical excellence awards;
designing time off in lieu arrangements;
using multiple contracts of employment, one or more of which can be outside the NHS pension scheme; and
establishing new organisations for service delivery, such as LLPs.
The guidance says the option involving LLPs, which some doctors are pursuing, is ‘not generally supported’ by government or NHS bodies, as it ‘introduces potential tax avoidance risks and, from a practical perspective, it may not be possible to take the necessary professional advice and to implement the arrangement during this financial year, before national solutions are available’.
The guidance also points out that while income from the LLP would not be pensionable, it would count towards threshold income and adjusted income for the purposes of determining if individuals are subject to a tapered annual allowance.
HM Treasury is expected to publish a new consultation shortly on revised rules for the NHS pension scheme and tapered annual allowance.
NHS Employers, an advisory body to NHS trusts, has warned of the potential tax avoidance risks for doctors who set up limited liability partnerships (LLPs) as a way of mitigating their problems with the pension tax annual allowance.
In its Pension tax guidance for employers: Local measures to support staff and service delivery during the 2019/20 financial year, published on 2 September, the body has outlined a number of options, including using ‘existing flexibilities’ to enable employees to remain in the NHS pension scheme. These include:
managing pensionable pay by determining certain elements of pay as being non-pensionable;
using non-pensionable local clinical excellence awards;
designing time off in lieu arrangements;
using multiple contracts of employment, one or more of which can be outside the NHS pension scheme; and
establishing new organisations for service delivery, such as LLPs.
The guidance says the option involving LLPs, which some doctors are pursuing, is ‘not generally supported’ by government or NHS bodies, as it ‘introduces potential tax avoidance risks and, from a practical perspective, it may not be possible to take the necessary professional advice and to implement the arrangement during this financial year, before national solutions are available’.
The guidance also points out that while income from the LLP would not be pensionable, it would count towards threshold income and adjusted income for the purposes of determining if individuals are subject to a tapered annual allowance.
HM Treasury is expected to publish a new consultation shortly on revised rules for the NHS pension scheme and tapered annual allowance.
