The point at which the pension annual allowance taper is triggered will increase by £90,000 for both threshold income and adjusted income in 2020/21.

The measure, announced in last month’s Spring Budget, will result in the taper not affecting anyone with income of less than £200,000.

It should bring to an end a long-standing disagreement between the government and senior clinicians. Many of latter left the NHS pension scheme, rejected overtime or retired early to avoid large tax bills.

Although Chancellor Rishi Sunak has stated this “will take around 98% of consultants and 96% of GPs out of the taper altogether”, many critics called for the controversial taper’s abolition.

For those with incomes that breach both the threshold income and adjusted income limits, Sunak announced he would reduce to £4,000 the minimum annual allowance.

Steve Cameron, Pensions Director at Aegon, said:

“The tapered annual allowance has seen some senior NHS professionals facing tax bills running to six figures.

“Removing the taper would have been too costly but instead, when the threshold kicks in was raised.

“This may reduce the number of higher-paid individuals who face a tax penalty, but many individuals will still fear being caught out.

“The government’s priority right now must focus on health matters.

“Longer term, the overall system of pension reliefs and allowances needs a thorough overhaul to make sure it is fit for purpose and not just for the NHS.”

The £40,000 annual pension allowance - which remains in place for 2020/21 - is tapered for those on high incomes.

That meant for every £2 of adjusted income above £150,000 a year in 2019/20, where the threshold income of £110,000 was also breached, £1 of the annual pension allowance was lost.

From 06 April 2020, the adjusted income figure increases to £240,000 and the threshold income increases to £200,000.

Anyone with income of more than £300,000 in 2020/21 will have their minimum reduced tapered allowance decreased to £4,000.

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