AISMA response to 2021 Budget
March 3, 2021
James Gransby, Vice-Chairman, Association of Independent Specialist Medical Accountants, said:
“In a widely predicted move, the lifetime allowance limit for pensions has been frozen at £1,073,100 for the tax years up to and including 2025/26. This would affect anyone expecting to draw an NHS pension of over £46,656 and with this limit now being frozen, more people will be caught by this tax charge. The effect is an extra £21,000 tax charge on the pension pot at retirement.
“There will be some extra costs for GP practices paying staff the National Living Wage who will see this increase from £8.72 to £8.91 per hour which represents a 2.2% increase.
“With personal tax allowances frozen, doctors who are higher rate tax payers should also expect to pay extra tax. For any doctor earning over £55,000 this will equate to around £100 a month more tax by 2026.”
Response to proposals to rectify pension discrimination
February 5, 2021
AISMA welcomes the proposals made by the government to rectify the discrimination that arose from transitioning NHS pension scheme members to the 2015 Scheme. The decision to opt for the Deferred Choice Underpin (DCU) takes the pressure away from any immediate need to make decisions and members should therefore be no worse off than they are now and many will see significant improvements to their pension benefits from opting back into the legacy pension schemes.
There will be additional positive consequences for many higher earners through reduced annual allowance tax charges which will need retrospective adjustment.
The changes will put significant pressure on NHS Pensions (and their regional equivalents) to update pension records with an end date set of 1 October 2023 to do this. NHS Pensions will also need to consider the complicated issues around how to allow GP’s who have previously opted out to unpick these decisions if appropriate.
Response to Treasury rejection of NHS Pension Scheme flexibility proposals
February 4, 2021
While AISMA welcomed changes that were made to the annual allowance tapering rules in the March 2020 Budget, many higher earning GPs will still exceed the allowance and face tax charges.
The Treasury has confirmed that no further flexibilities are being proposed to reduce the scope of those being impacted.*
A significant issue remains for GPs in receiving timely and accurate pension information and while improvements have been made, there are gaps remaining in many pension records, making it difficult for GPs to assess their possible tax liabilities.
The current system of estimated scheme pays elections having to be submitted and then corrected several years later is unhelpful for pension scheme members, who may ultimately pay for this through increased administration charges.
Tips for practices on checking monthly statements
January 22, 2021
It’s important for practices to review their GMS/PMS statements on Open Exeter each month and reconcile them to the money received into their bank accounts. Writing in Practice Index, AISMA accountant David Lockitt offers some tips to practice managers on checking the practice’s monthly statements for payments and deductions. Visit the Practice Index website to read the article in full.
Freeing up practices to support COVID vaccination
January 8, 2021
Welcoming the letter from NHSE/I on 7 January 2021, setting out plans to free up general practice to support COVID vaccination, Andrew Pow, AISMA Board member said:
“In November we wrote to the British Medical Association to explain the financial impact of COVID-19 on general practice. Highlighting the concerns AISMA members had about practices finances during the current difficult year, the letter called for pragmatic solutions through income guarantees and cost reimbursements.
“The measures NHSE/I have put in place for the remainder of the 2020/21 financial year answer many of the concerns we raised in our letter and we are pleased that steps are to be taken immediately to reprioritise work in general practice. The additional funding for PCNs is particularly welcome, given the essential role they are playing in managing the COVID vaccination programme.
“AISMA will monitor the situation for GP practices over the coming months and will continue to brief the BMA and NHSE/I on financial issues as they arise.”
Follow this link to download the NHSE/I letter
AISMA and ICAEW publish new tax guidance for PCNs
December 14, 2020
The Association of Independent Specialist Medical Accountants (AISMA) and the healthcare group of the Institute of Chartered Accountants of England and Wales have together issued guidance for primary care networks (PCNs) and their member practices on the tax treatment of PCN income and expenditure.
PCNs are recommended to meet tax requirements by drawing up financial statements that provide a summary of transactions across the network for the relevant accounting period. The financial statements will enable member practices to reflect their share of PCN transactions correctly into their own practice accounts so that they can meet the requirements of tax legislation for the completion of partnership tax returns. The deadline for submitting tax returns for 2019/20 is 31 January 2021.
Deborah Wood, AISMA chairman, said: “This joint guidance has been issued to resolve conflicting views on how to account for PCN surpluses. Many practices are not seeing this income as part of their contract, despite it being commissioned as a Direct Enhanced Service. This means there is potential for practices to under declare their income tax for 2019-20.”
HMRC states that income is earned when services are performed and that the timing of issuing bills, invoicing, or receiving payments does not determine when income should be recognised.
For example, if income is received under the terms of the 2019/20 PCN Directed Enhanced Service, which has no requirement for practices or PCNs to do anything beyond 31 March 2020 to ensure that the core £1.50 per patient income is earned, then that income must be recognised in the year to 31 March 2020, even if it has not been spent on any specific activities at that time. The surplus falls into profit and becomes available working capital to be spent at some future date or to be distributed to the PCN members.
Financial reporting rules specifically prohibit provisions being made for future expenses and losses in the financial statements when no obligation exists at the balance sheet date.
Ms Wood added that this will be a recurring issue in 2020/21 as some PCNs struggle to use their network core payments for the year because of the continuing drain on practice resources as a result of the pandemic.
Follow this link to download the guidance document
Response to 2019/20 Pensions Annual Allowance Charge Compensation Policy
December 11, 2020
Commenting on the publication yesterday by NHS England and NHS Improvement of the 2019/20 Pensions Annual Allowance Charge Compensation Policy, Andrew Pow, board director of the Association of Independent Specialist Medical Accountants, said:
“The publication of the rules by which NHSE&I will compensate clinicians for annual allowance charges are welcomed. However, GPs will have issues with meeting the strict 31 July 2021 deadline for submitting a Scheme Pays Election because of the lengthy process involved in PCSE processing the 2019/20 pension forms and for the Pensions Agency to calculate the pensions growth.
“GPs will therefore need to submit estimated elections, or at the very least a protective nominal election by 31 July 2021 if they think they are at risk of having an annual allowance charge in 2019/20.
“GPs will then have to apply using a separate compensation policy application form via PCSE. The methodology of this has not yet been agreed with PCSE so GPs at the moment cannot make the compensation application.
“A significant number of GPs do not have correctly updated pension records. Producing accurate information will be at the heart of making this policy work and there is an urgent need for PCSE to correct the large number of out-of-date records.
“The policy is based on a very complicated system with many possibilities for things to go wrong. It’s essential for GPs to keep hold of the records and confirmation letters that they receive right up until retirement.”
Practice Index: 24-hour retirement for GP partners
August 14, 2020
AISMA response to HM Treasury pension consultation
July 17, 2020
Commenting on yesterday’s announcement by HM Treasury of a consultation to seek views on proposals relating to the 2015 public service pension scheme reforms, Deborah Wood, chairman of the Association of Independent Specialist Medical Accountants (AISMA) said: “This is a positive development for doctors who are members of the 2015 NHS Pension Scheme. It follows a Court of Appeal judgment in December 2018 which ruled that the transitional protection arrangements under the scheme for doctors closer to retirement directly discriminate against some younger pension scheme members.
“The government is seeking views on two proposals outlined in the consultation. For doctors the permutations are numerous, with consequences for revised tax calculations on pension growth. We will be responding to the consultation in due course, once our pension experts have undertaken a thorough analysis of the proposals outlined.”
The consultation closes on 11 October. Documentation can be found here:
AISMA elects new chair
May 18, 2020
Deborah Wood has been elected chairman of the Association of Independent Specialist Medical Accountants (AISMA). She takes over from Bob Senior, who has led the Association since 2010, following his retirement earlier this year.
Ms Wood is a partner at MHA Moore and Smalley, an accountancy firm based in the North West, where she leads the specialist healthcare services department. James Gransby, a partner at the Bromley office of RSM UK Tax and Accounting, becomes AISMA’s vice chairman.
Paying tribute to Mr Senior, Ms Wood, who is a founder member of AISMA, said: “Through his leadership, Bob has been an excellent ambassador for AISMA and leaves the organisation in great shape. As chairman my aim is to continue developing the excellent relationships we have built with the BMA, HMRC, NHS Pensions, NHSE/I, and their respective bodies and representatives in Scotland, Wales and Northern Ireland.
“AISMA, which celebrates its 25th anniversary this year, represents the views of the thousands of GP practices advised by the Association’s network of members, who are all highly knowledgeable specialist accountants with much to contribute to ensure the long-term sustainability of general practice.”