Excess pension contributions

Q:I am a high-earning 54-year-old GP partner in an NHS PMS practice. I understand that to decide whether extra tax is payable there are three steps: 1, calculate the annual pension entitlement at the start of the year; 2, revalue the annual pension entitlement at the start of the year adding in the consumer prices index (CPI) increase; and 3, calculate the annual pension entitlement at the end of the year. The trouble is that there are different interpretations of how these figures are obtained. For example, the BMA suggests considerable extra taxation will occur for most high-earning GPs, whereas the NHS Pensions and HMRC websites suggest otherwise. Various financial advisers also come up with different conclusions. It seems to me that an annual rise in pension of more than £2,600 would trigger extra taxation. Does this take into consideration, however, the CPI increase? Please can you help us with some definitive advice?


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