By: 20 March 2017
Cavendish Medical – Money Matters – why you need to protect your pension now

Time is running out. Simon Bruce explains why you need to protect your pension now

You have just a few more months to apply for a government scheme which can protect the value of your pension from substantial tax charges. And to give added focus, HMRC has released data showing it has clawed an extra £126 million in tax from individuals caught out by the reduced tax-free pension saving allowance limits in 2015–2016 – a 62 per cent rise from the previous year.

The lifetime allowance for pension savings – the total amount that can be built up and taken from pensions without triggering an additional tax charge – was reduced to £1 million on 6 April 2016. If you save over this limit – and even middle-earners could breach the threshold if accumulating NHS benefits for many years – you will face tax charges of up to a staggering 55 per cent.

Remember that the lifetime allowance limit applies to the sum of your NHS pension value plus any private pensions you hold.

The government introduced a protection scheme, Individual Protection 2014 (IP14), two years ago which allows savers to restore the value of their lifetime allowance back to £1.5 million provided certain criteria are met. Sadly, many doctors will miss this valuable opportunity because they are unaware that the deadline for applications closes on 5 April 2017.

You will need to move quickly to get your application in place by April as there are several valuations needed first, which can be difficult to obtain. Don’t delay if this does apply to you – you should act now to defend your future benefits against unnecessary tax charges.


Simon Bruce is managing director of Cavendish Medical – specialist financial planners for senior medical professionals in the NHS or private practice. For a second opinion on your finances, please contact us on 020 7636 7006.


The content of this article is for information only and must not be considered as financial advice. Cavendish Medical always recommends that you seek independent financial advice before making any financial decisions.


Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. The value of investments and the income from them can fluctuate and investors may get back less than the amount invested.