The Tory government is considering a major tax break for people who earn more than £110,000, it is reported today.
Treasury officials are looking at raising a key threshold on pension contributions to curb a shortage of doctors, according to The Times.
But if it happens it could hand a tax cut to all workers who earn more than the current threshold, which is £110,000.
A Whitehall source said a review of the system is still under way – but did not deny the proposal had been raised.
A Treasury spokesman said: “We don’t comment on speculation about tax changes”.
The current system means people are hit with unexpected tax bills of up to five figures if their earnings top £110,000 per year.
If they earn £1 over the threshold, they are classed under a completely different set of rules for calculating their income to decide what tax relief they’ll get on their pension.
Once they’re in the high earnings system, their tax-free pension allowance starts being reduced from £40,000 to £10,000.
The rules are relatively simple if people are definitely in one system or the other.
But experts say having to jump between both systems hits top doctors – average salary £112,000 – who choose to take on extra shifts.
Treasury officials are reportedly looking at raising the £110,000 threshold to £150,000.
Ex-Lib Dem pensions minister Steve Webb, of Royal London, told the Mirror the system may be bad – but so was the idea to fix it.
He said: “What’s reported today wouldn’t tackle the problem at its source – it just tweaks the figures.
“We will still have this ridiculous cliff edge. We will still have people not having a clue what they owe. It will just be a slightly smaller group of people.”
Mr Webb said the system did have to be changed, but only to make it more predictable and simple.
He said “As a Mirror reader you want your consultant to come in and do extra shifts to help people. And it’s clear they haven’t been doing that because of this issue.
“It’s clear the current system is causing problems for people dependent on the NHS so something must be done.”
The Budget is due on Wednesday 11 March.