On the 4 February 2021 the government announced its response to the consultation in respect of public pensions. This is important as it includes your NHS Pension and sets out how the government proposes to remedy the discrimination found by the courts by transferring certain scheme members to the ‘reformed’ 2015 NHS Pension Scheme from the ‘legacy’ scheme, the 1995/2008 NHS Pension Scheme.
The response and proposed remedy are extensive but below we provide a summary of the key points.
- Dependent on age many of you will have transferred over to the ‘reformed’, 2015 NHS Pension Scheme, on 1 April 2015 or later under transitional arrangements. You will now be transferred back to the ‘legacy’ scheme, if you were in the 1995 scheme you will revert to the 1995 pension scheme rules and members of the 2008 scheme will revert to the 2008 NHS scheme rules.
- In the run up to retirement and intended from 2023, two Annual Benefit Statements will be produced showing the above to assist you in deciding when to retire.
- You will remain in the ‘legacy’ scheme up until 31 March 2022 after which all future service will be transferred over to the ‘reformed’, 2015 NHS Pension Scheme. This will also apply to members who had not been transferred to the ‘reformed’, 2015 NHS Pension Scheme and but for this consultation would have remained in the ‘legacy’, 1995/2008 NHS Pension Scheme.
- At retirement you will be offered what is known as a Deferred Choice Underpin (DCU). What this means is that two calculations of your NHS Pension benefits will be provided. These will be as members of the ‘legacy’ scheme, 1995/2008 NHS Pensions for the period 1 April 2015 through to 31 March 2022. The second choice as members of the ‘reformed’, 2015 Scheme from 1 April 2015 through to 31 March 2022. These dates will vary if you were a transitional member.
- Annual Allowance charges paid either personally or by way of Scheme Pay Elections will have to be revisited to determine if additional tax or a refund is due. For any additional tax payable, limits on how far the Revenue can go back are provided which is not to exceed four years but there are no time limits on refunds or alterations to Scheme Pay Elections already made.
- Should at the date of retirement you decide to choose to return to the ‘reformed’ scheme, (2015 NHS Pension) for the period 1 April 2015 through to 31 March 2022, there will be very high pension growth in your final year which under normal circumstances would result in a substantial annual allowance charge. However, under the proposals it appears to be that no tax will be payable under these circumstances.
Action Points
- For many of you no action is required at the moment as the necessary legislative changes are needed to be put in place. However, since it will not be until 2023 possibly at the earliest that the NHS Pensions will be able to provide the two Annual Benefit Statements and as a consequence revised Annual Allowance Statements, many of you may wish some indication if a refund or additional tax could arise as a result of these changes and at least provide a method to check the accuracy of what will be produced by the NHS Pensions in the future.
As a firm we have the system in place to undertake these calculations to provide an indication of any refunds or additional tax due and for these to be used to check future statements produced by NHS Pensions. Many doctors may be eligible to reclaim thousands of pounds in Annual Allowance tax previously paid.
This service is available to consultants & GPs both in England & Wales administered by NHS Pensions and for consultants in Scotland administered by the Scottish Public Pensions Agency (SPPA).
- If you have recently retired and had been a member of the ‘reformed’ 2015 NHS pension in the run up to retirement you will be entitled to your benefits being recalculated should you decide as a member of the ‘legacy’ , 1995/2008 NHS Pension Scheme. This is important if you took early retirement on the grounds of ill health.
- Some of you made the choice to become deferred members of the NHS Pension Scheme, the majority being GPs in England & Wales and some consultants in Scotland by way of special arrangements in 2019/20 to mitigate Annual Allowance tax charges. There is scope to return to the scheme for the periods that you deferred but this will be dealt with on an individual basis.
Many practices are dependent on their year end accounts to determine how well the year has been and as a platform to project forward for planning purposes. The accounts are no doubt essential as they provide the basis for tax compliance, banking facilities and determination of partners drawings amongst others.
However, they are historical in nature, detailing past financial events.
Some practices look towards management accounts to assist and like the annual accounts they too are historical but to a lesser extent.
What many practices fail to identify is the power of the cashflow.
Cashflows can take on different levels of complexity and as such different levels of sophistication and experience of the end user is needed. A large company would have different cashflows for each division or subsidiary and maybe each activity which is then consolidated into one unifying cashflow statement.
Depending upon the ultimate end user of the cashflow, the statement could be prepared as an easy to understand straight forward summary or something incredibly detailed or something in between.
A cashflow can easily be adopted by GP Practices.
Below we will look at the different levels of cashflows that can be adopted to help with GP practice finances.
The Chancellor, Rishi Sunak, has announced that the furlough scheme will be extended to the end of March 2021.
It will be based on 80% of hours not worked by an employee with a cap of £2,500 and with the employers responsible for national insurance and pension contributions for hours not worked.
The Chancellor will review the position in January 2021 to determine whether additional contributions will be made by employers as it had done under the earlier furlough scheme when it was coming to an end in October 2020.
As with the previous furlough scheme, restrictions apply if you are in receipt of government funding and this applies principally to GP practices and Dentists with NHS patients but with some exceptions possibly for staff involved with private patients.
The previously announced job support scheme that was to replace the furlough scheme will no longer be implemented as the furlough scheme has been extended.
The Job Retention bonus of £1,000 per employee for previously furloughed employees who are retained until the end of January 2021 will be deferred until a later date due to furlough being extended.
Additional support for the self-employed which is applicable mainly to self-employed GP locums and any purely private self-employed consultants may also be available.
During the lockdown many of you with limited companies may have resorted to withdrawing funds from your company bank accounts over and above any normal salary and/or dividend payment taken in the past. This may have been withdrawn as a loan as opposed to a salary or dividend payment.
Below is a guide to help explain the consequences of taking a ‘loan’ from your company and what is known as the Director’s Loan Account ("DLA").
Although your company is owned and controlled by you, legally and for tax purposes it is a separate legal entity. This is important and it is because of this separate legal status and the control you exert over it that HMRC has safeguards to ensure that the funds held and owned by the company are afforded safeguards.
The Revenue pays particular attention to the DLA.
A DLA can sometimes be referred to as a Directors Current Account ('DCA'). This directors loan/current account represents monies owing to you or monies owing back to the company from you. If you borrow money from your company (instead of say declaring a dividend) then assuming the company didn't already owe the same amount of money to you, then this would show within your company accounts as a directors loan account.
Financial year end
When it comes to the financial year end an account is drawn up internally within the
Following on from our newsletter of 29 July 2020 highlighting barcoding as a quick and efficient method of administering flu clinics Public Health England on 5 August 2020 published updated details of the national flu immunisation programme for 2020/21.
Details of the programme can be found here.
The salient points to note are:
Flu vaccinations, subject to contractual negotiations, will additionally be offered to:
- Household contacts of those on the NHS Shielded Patient List. Specifically, those sharing accommodation on most days over the winter where close contact is unavoidable.
- Children of school Year 7 age in secondary schools (aged 11 on 31 August 2020).
- Health and social care workers. This should be provided by their employer.
- Subject to vaccine supply 50 to 64-year-old group phased over November and December.
An inactivated vaccine may be offered to children whose parents refuse live attenuated influenza vaccine.
One of our partners Ian Tongue is a regular contributor to Independent Practitioner and this month he covers 10 Financial Considerations for Succeeding in Private Practice in light of COVID19.
You can read his full article here
Remember, if you haven't paid your 31 July 2020 tax payment yet, you do not need to make payment until 31 January 2021. HMRC have been sending out the usual 31 July 2020 payment slips but have automatically changed the due date for payment to 31 January 2021.
If you would like to discuss your private practice please feel free to contact us
Cashflow is important for any business and for a GP Practice it can be vital when looking at Drawings Projections or simply planning the day to day finances of the practice.
Float is an online tool that links with Xero and can be used to forecast the cashflow of your practice. It can be pre-populated with your data and has proved invaluable for some of our GP Practices. You can also run multiple scenarios to see the impact of making different business choices on your practice cashflow. In our video below we explain Float in more detail.
The Annual Allowance is a complicated topic but here at Sandison Easson we have spent years understanding how the growth arises in the NHS Pension Scheme for Annual Allowance purposes. If you need any assistance planning to make the most of your Annual Allowances or preparing your Tax Return and/or Scheme Pays Elections then please get in touch.
Changes from April 2020 - Click here to watch our latest Annual Allowance webinar
If there is one thing that benefitted from the COVID 19 lockdown it was the environment.
Less cars and other modes of transport made an appreciable impact.
Before lockdown the government had introduced incentives particularly relating to electric cars.
Some of these incentives differed in different parts of the UK, particularly in Scotland where more incentives are available and detailed below.
Electric Cars – 100% Allowances
The government in its drive for a greener environment provided what was known as enhanced capital allowances for electric cars. Cars whereby the CO2 emission is 50g/km or less.
These cars are entitled to 100% writing down allowance in the first year as opposed to 18% each year for non-compliant vehicles.
In our previous private practice post we set out some points for you to consider as the lockdown eases and there is some return to normality. This is available on our website.
Independent Practitioner Today has also kindly published our pointers here.
Towards the end of the article we highlighted some tax planning opportunities and advice that will be set out below and for which further detailed guidance can be provided on a personal basis.
The tax planning will be split between those who practice as individual practitioners or in partnership say with their spouse or partner and those of you that have limited companies.
Sole Practitioner/Partnership
If you have a 31 March or 5 April financial year end then for the year 2020/21 the first part of the year will have seen little or no private practice activity.
The Revenue will allow the 31 July 2020 tax payment (your second payment on account for the tax year 2019/20) to be deferred until 31 January 2021.
Many of you will have reflected over the past few weeks of the impact of COVID19 and the change to your practice in its everyday dealings with patients, staff and your own interactions.
The government has published some case studies of how various organisations within the NHS dealt with the pandemic and may assist you in your own COVID 19 debriefing.
Details of the various case studies published on 5 June 2020 can be found here
The general public, ourselves included, have been acutely aware from the news and government announcements of the number of individuals infected and sadly the number of people who have lost their life due to COVID. Little is heard of those that survive and what changes to their lives and care they will need following their recovery from the infection.
On the 5 June the government published guidance on the aftercare of inpatients recovering from the virus. Details can be found here.
Updated guidance (6 June 2020) on the management of staff and exposed patients or residents in health and social care settings has been published and is available here.
Finally, flow charts relating to symptomatic and asymptomatic workers return to work following a SARS-COV-2 test have been published and can be found here:
