The Scottish Public Pensions Agency has announced it will now accept a scheme pays election from members who become subject to an Annual Allowance tax charge even where the charge or part of the charge relates to pensions growth ('pension input amount') between their reduced tapered Annual Allowance and the Standard Annual Allowance of £40,000.
This applies from the 2016/17 tax year and this will be welcome news for members of the Scottish Public Pensions Agency.
Without this option, if a member had pension growth of say £40,000 but was only entitled to a tapered annual allowance of £10,000 then they may have faced an annual allowance tax charge of up to £13,500 payable by 31 January following the tax year. In the first year this applies, they may also need to make a payment on account towards the following tax year which increases the amount due from £13,500 to £20,250.
As far as we are aware, the NHS Pension Scheme in England has not introduced the same voluntary option.
Today one of our partners Aaron Swinton held a talk as an Invited Guest Speaker at the 2018 Winter Scientific Meeting of the Association of Anaesthetists of Great Britain and Ireland. The feedback from the audience was excellent and the topic covered was in relation to the Tapering of the Annual Allowance.
He was also invited to answer questions on the Q&A Expert Panel which followed the talk.
If you are hosting your own event and would like to invite one of our Expert Medical Accountants to talk at your event then please contact us today.
Stop the taxman visiting
One of our partners, Ian Tongue explores some common areas of risk and the steps that can be taken to minimise the risk of the tax inspector ringing your doorbell
You can read his article here
Are you considering buying a new car?
One of our partners, Ian Tongue, has written an article in Independent Practitioner for those considering buying a tax-efficient car.
You can read his article here
From 6 April 2018 the £5,000 dividend allowance will reduce to £2,000.
If you are a shareholder of your own company and have not yet taken advantage of the £5,000 dividend allowance since 6 April 2017 then you may wish to consider whether or not you should make the most of the larger dividend allowance whilst it is still available.
Primary Care Support England have introduced a new online form to be used for all GP Payments and Pension administration and queries. The form will be available on their Contact Us Page here https://pcse.england.nhs.uk/contact-us/
When the new form is live, the email addresses firstname.lastname@example.org and email@example.com will no longer be monitored, and all forms and queries must be submitted online.
On the topic of GP Pensions, we are still waiting for NHS Pensions to release the 2016/17 Certificate of Pensionable Profit form for GPs which must be submitted by 28 February 2018.
An employer can provide Trivial Benefits to their employees and directors without incurring a tax charge. This means as an employer you can provide your staff, or your limited company can provide its staff and or directors with gifts of up to £50 each without a tax liability arising. Multiple £50 gifts can be given during the tax year.
If the benefit is provided to a director or other office holder of a family run company, the exemption is capped at £300 in the tax year. So in essence, HMRC allow tax relief on six £50 gifts each tax year.
From HMRCs perspective, a benefit is exempt from tax if all of the following conditions are satisfied:
- The cost of providing the benefit does not exceed £50
- The benefit is not cash or convertible into cash. Gift cards are OK as long as they are not exchangeable for cash
- The employee or director is not entitled to the benefit as part of any contractual obligation
- The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
This is particularly important if your taxable income exceeds £110,000.
In simplified terms, the Annual Allowance is the maximum amount of tax free growth an individual's pension savings can grow by in any one year (this also includes the value of payments into a private pension). The annual allowance limit is set by HMRC and is currently £40,000. If an individual exceeds this limit they may have additional tax to pay.
From 6 April 2016 where an individual has “adjusted income” (basically, taxable income plus pension growth) between £150,000 and £210,000 their annual allowance will be tapered down from £40,000 to £10,000 on a sliding scale. This change could increase your tax liability by £13,500! It may be possible to avoid this by changing your business structure. If your taxable income is expected to exceed £110,000 then you may benefit by reviewing this. With the onset of Brexit and an increase in the Consumer Price Index, many doctors may face unexpected tax liabilities. If your taxable income exceeds £110,000 and you are an active member of the NHS Pension Scheme then contact us today on 01625 527 351 for a free no obligation discussion.