Boris Johnson, the Conservative frontrunner to become the next prime minister, this week pledged to review the Lifetime Allowance in response to concerns that pension tax rules are driving NHS doctors to reduce their hours or retire early.
Mr Johnson said if elected prime minister he would “fix” the Lifetime Allowance, which governs how much can be saved into a pension before tax charges apply.
The Lifetime Allowance currently stands at £1.055m but has fallen from £1.8m six years ago, as the government sought to cut the costs of pensions tax relief.
In comments reported in the Telegraph newspaper, Mr Johnson claimed he had “repeatedly” tried to persuade Philip Hammond, the chancellor, to address the current limit on the Lifetime Allowance.
However, in a Twitter exchange this week, Mr Hammond said he had not had a request from Mr Johnson “to meet yet or any correspondence”, but his door was “always open”.
Spokespeople for Mr Johnson did not reply to a request for comment.
Mr Johnson’s comments came with pressure being heaped on the government over a workforce crisis in the NHS, driven by 2016 changes to pensions tax rules which have hit thousands of high-earning hospital doctors and GPs.
NHS hospital leaders warned this week that patients will face far longer queues for treatment if the government cannot, within weeks, solve the pensions problem that has led many doctors to cut back working hours or retire.
The issue has arisen following the introduction of changes in 2016 which saw the annual allowance taper from the standard £40,000 to £10,000 for those with adjusted incomes of £150,000 or more.
But the rules mean that those with threshold incomes of £110,000 are at risk of triggering a tapering of their annual allowance.
Due to their earnings, all full-time hospital consultants who are currently a member of more than one NHS pension scheme will be affected by the tapered annual allowance with few options to avoid tax charges for breaching their threshold other than reducing their hours or quitting early.
The government has pledged to consult on giving senior doctors flexibility to halve their pension contributions — the so-called 50:50 option — to mitigate the risk of breaching their annual allowance and triggering tax bills.
But MPs this week said the proposal, to be subject of a forthcoming consultation, would not resolve the issue.
“My local hospital made it clear today that the 50:50 contribution proposal will not solve this problem because, as other members have said, the problem is the taper,” said Ben Bradshaw, Labour MP, in a parliamentary debate on the NHS pension issue.
In response, Liz Truss, economic secretary to the Treasury, said the government would not be making tax changes specifically for NHS doctors.
“The government are taking this issue very seriously,” said Ms Truss. “However, the House will recognise that the same tax rules must apply identically to everyone in the same situation, regardless of their employer.
“It is simply not possible for the tax rules applying to senior clinicians in the NHS to be different from those that apply everywhere else.”
However, Ms Truss hinted that the government would undertake a broader review of the system of taxation.
“The important thing to remember is that, while we need to look for NHS-specific solutions — which is precisely what the health secretary is working on — the broader issue of taxation cannot be looked at just for one profession,” said Ms Truss.
“The broader issue of the pension system has to be looked at in the round and in the whole. There is no doubt in my mind that the British tax system is too complex at present.”
Ms Truss said a consultation would be launched “soon” on the 50:50 proposal to allow senior doctors more flexibility over their pension contributions.