The suggestions made by the Association of Independent Specialist Medical Accountants (AISMA) in response to a recent government consultation on the NHS Pension Scheme have yielded good news for GP practices affected by final pay control rules. The official response, published last week on the gov.uk website, includes AISMA suggestions which will be included in reforms to the final pay control regulations.
Final pay controls were introduced on 1st April 2014 to stop the abuse of the NHS Pension Scheme, whereby a practice gives a large pay rise to someone before retirement in order to boost their pension. It also applied to increases in profit shares for non-GP partners, including practice managers. This can result in a hefty charge being levied on the GP practice.
James Gransby, AISMA Vice Chair and partner, RSM UK Tax and Accounting Limited, said: “The proposals will significantly reduce the number of charges being levied by increasing the cases where exemptions apply. One of the areas that concerned AISMA members was pensionable pay increases for non-GP partners due to an increase in profit share percentage as a result of another partner reducing their sessional commitment. These partners will now be exempt from final pay control rules because another partner leaving the practice has been deemed to be outside the employer’s control.”
Mr Gransby continued: “It is estimated that over 20% of practices have been landed with a final pay controls charge, many with substantial six-figure sums. The rules have now been relaxed and these practices now have a six-month window of opportunity to have these figures revised downwards, or eradicated altogether, if the charge was levied since 1 April 2018 and if they can benefit from the new rules.”
Mr Gransby warned that the legislation is complex, as are the changes, and that practices should seek specialist advice to assess whether they can benefits from the changes retrospectively.