Pension tax hikes in this year’s Budget will kill Starmer’s neighbourhood health service, as more doctors retire early to avoid the increase, warns NHS accountancy chief Katie Collin.
Collin’s intervention comes as pension lump sum withdrawals climb by 61% on fears that Reeves will announce a cut to the tax-free allowance this November, and follows the unveiling of the first 43 areas that will receive neighbourhood health services.
Collin argues that, should the Chancellor reduce the tax-free lump sum, she’ll deepen an already concerning trend of NHS doctors choosing to retire early. Cases rose by 9.3% year-on-year from 2008 to 2023, and, for Collin, increased pension tax could push these figures even higher.
The resulting loss of doctors would come at a pivotal moment for Starmer’s new neighbourhood health service initiative – a key component of his 10-year plan for the NHS. It will require hundreds of doctors, but Collin warns the Chancellor’s potential pension tax hikes would only push them away, dealing Starmer’s plans a “knock-out blow.”
Katie Collin, partner at specialist medical accountancy firm Ramsay Brown LLP, said: “A malaise has been setting in amongst doctors over the last few years – we’ve heard firsthand how dissatisfaction over pay, hours, workload, and abuse from patients has been pushing many to consider throwing in the towel and taking early retirement.
“Given so many are already teetering on the edge of this decision, hiking pension tax could easily be the final push many have been waiting for. That would mean the loss of potentially hundreds of NHS doctors – a loss that couldn’t come at a worse time.
“Starmer went heavy on promises of a neighbourhood health service in his 10-year plan for the NHS – but a healthy workforce will be required to power such an initiative. Cutting the tax-free lump sum, or increasing pension tax through other means at this year’s Budget, will simply decimate that workforce and deal his neighbourhood health service a knock-out blow before it’s even got off the ground.
“Reeves must approach pension tax with caution as November nears. Yes, there’s a fiscal hole to plug, but this potential policy would only undermine the Government’s own missions, dashing their hopes of ever building community-based healthcare and fixing the NHS.”
