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Thousands face big tax bills following reforms

Our Chief Executive talks to the Financial Times about the potential impact of the pension tax

On Monday the FT reported that ‘Thousands of members of the UK armed forces have been trapped by a government pension reform aimed at restricting tax breaks for senior personnel but which is hitting lower ranking servicemen and women as well. In 2017-18, 3,840 members of the armed forces pension scheme breached their annual tax-free pensions savings limit, exposing them to hefty tax bills.  This was a near-quadrupling of the 1,010 breaches recorded in 2015-16. The number of breaches peaked at 3,900 in 2016-17.

The figures, provided by the Ministry of Defence following a freedom of information act request, come as the government acts to stem a staffing crisis in the National Health Service involving doctors reducing their hours to avoid tax bills for breaches of their annual pension allowance. The allowance governs how much can be saved into a pension each year before tax charges apply. ‘You can read the full article by Josephine Cumbo of the Financial Times here*

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