Pension allowance changes could result in 2011-12 self assessment tax returns being submitted after the January 2013 filing deadline. GPs and others are unlikely to receive the information that they need to complete the tax return before the deadline. This could result in HM Revenue & Customs issuing an automatic fine followed by substantial daily penalties.
The new rules for tax relief on pensions state that only the first £50,000 of pension contributions are eligible for tax relief in each year. The previous limit for tax relief was £255,000. The lifetime allowance has also been reduced to £1.5m from £1.8m – a reduction of 16 per cent. To demonstrate that they have been compliant with the new regulations, GPs will have to complete their tax return with the information provided by the NHS pension scheme. However, the details are not likely to be available until after the January 2013 deadline has passed. Not submitting the tax return could result in fines and penalties being issued.
The solution for GPs is to complete and submit a provisional tax return, with an amendment being made to the tax return when the information has been received from the NHS pension scheme. Outsourcing to a national accountants will ensure that prompt action is taken to avoid unnecessary penalties being received. A number of tax experts believe that HMRC is unlikely to demonstrate lenience towards individuals who submit tax returns which are incorrect. However, a low cost accountants will deal with the problem on behalf of its clients, minimising the risk of penalties.