If you have recently received a Clinical Excellence Award you could discover that the reward proves to be a substantial tax burden.

There is a restriction on the amount you can contribute to your pension annually while still receiving tax relief. This is known as the ‘annual allowance’.

As the CEA boosts your pensionable pay, you could breach your annual allowance which is currently set at £40,000. There is also a new ‘tapered’ annual allowance for high-earners which reduces the limit down further – to as low as £10,000 per year for most senior doctors.

Pension contributions above the annual allowance – at whatever rate is relevant to you – will be taxed at your marginal rate of income tax.

To make matters worse, your new CEA will be backdated to April 2017. Unfortunately, this means you may only find out if you are liable for a tax charge long after the current tax year is finished as the NHS Pensions Agency will not write to those breaching the annual allowance cap until autumn – and sadly little can then be done retrospectively.

In addition, you should also check the NHS sums carefully when they finally arrived – we have found many of the calculations to be wrong as they are sent automatically without a human ‘sense check’.

It can be frustrating for doctors who have worked ‘above and beyond’ to gain their CEA to then discover that the achievement could mean paying significantly more tax.

Negotiating your pension savings may be more complex than ever but with careful planning you can reduce your tax liabilities considerably. If you are not confident of your own position you should seek help without delay. For a thorough check of your financial position, please contact us on 020 7636 7006.