Following over a decade of reductions to the annual allowance, which has been particularly punitive for senior doctors in recent years, it will now be increased by 50 per cent to £60,000 from April 2023. This will mean many doctors will no longer face substantial tax bills for breaching the yearly tax-free pensions savings limit.

In 2010/11, the annual allowance stood at its maximum of £255,000 but has been falling ever since to the current £40,000, triggering pensions tax for more doctors.

In addition, the tapered annual allowance, which reduces the standard savings limit further on a sliding scale, will now revert to its previous minimum amount of £10,000. The amount was reduced from this figure to £4,000 in 2020.

The adjusted income threshold at which the tapered annual allowance applies will rise from £240,000 to £260,000 next month. Adjusted income includes not only workplace earnings, dividends from investments and property income but also NHS pensions growth and any personal pensions.

While not declared at the despatch box, the official Spring Budget papers confirm that different sections of the public sector pension schemes will be considered ‘linked’ for the purposes of annual allowance calculations. This means that negative pension growth in one scheme can be offset against positive growth in another.

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