Chancellor George Osborne promised a Budget that rewards work, backs business and is on the side of aspiration.

But there were no tax giveaways – any cuts in what GPs have to pay to HM Revenue and Customs are to be paid for by increases elsewhere.

Here’s a round-up of the main changes:

Personal Allowance

The tax free personal allowance is £8,105 for 2012/13 and will be £9,205 for 2013/14.

But most GPs take a hit as their personal allowance tapers away when their income exceeds £100,000. The marginal rate of income tax in 2012/13 is much higher than many realise. Effectively it is a whopping 60% on income between £100,000 and £116,210.

The age allowance will wither on the vine. The allowance for individuals aged 65-75 is £10,500 for 2012/13 and will not rise thereafter. For individuals aged 75+ it will be £10,660 for 2012/13 and will not be increased.

Higher Rate Threshold

The higher rate threshold, at which the 40% rate starts to bite, will be reduced from £42,475 in 2012/13 to £41,450 in 2013/14.

Top Rate of Tax

The 50% rate on income above £150,000 will continue for 2012/13, and reduce to 45% in 2013/14. No further reductions have been announced so far.

Child Benefit

From 2013/14, Child Benefit will be effectively tapered away when the higher earner in the household earns more than £50,000. The Benefit will be gradually reduced to nil as income reaches £60,000. The Benefit payment itself will not reduce, but will be clawed back through an additional income tax charge.

Company Taxation

Corporation Tax Rate

Further reductions will be made to the main rate of corporation tax, as follows:

• from 1 April 2012 – 24% (an additional 1% reduction on the rate previously announced)
• from 1 April 2013 – 23%
• from 1 April 2014 – 22%

The small profits rate will remain at 20% from 1 April 2012.

Employment tax

Cars

The scale charges for cars provided to employees will be increased by one percentage point from 2012/13, subject to a maximum of 35%, and by a further two percentage points from 2015/16, subject to a maximum of 37%

The fuel benefit charge will be increased to £20,200 x the car benefit percentage from 2012/13.

Share Option Schemes – Enterprise Management Incentives (EMI)

From 6 April 2012, the limit on the value of shares that can be awarded through an

EMI share option will be increased from £120,000 to £250,000.

Shares acquired after 6 April 2012 will qualify for Entrepreneur’s Relief, and benefit from the 10% rate of Capital Gains Tax.

Indirect taxes

VAT

From 1 April 2012, the VAT registration threshold will increase from £73,000 to £77,000 and the VAT deregistration threshold will increase from £71,000 to £75,000.

The Finance Bill 2013 will introduce legislation to include certain NHS bodies in the section 41 refund scheme.

Stamp Duty Land Tax on Residential Property

From 22 March 2012, SDLT on the purchase of a residential property exceeding £2 million will be charged at a rate of 7%.

Additionally, SDLT on the purchase of such property by certain types of companies, collective investment schemes and partnerships will be charged at a higher rate of 15%. This measure will take effect from 21 March 2012.

In the latter case, the government will also consult on the introduction of an annual charge on such properties with a view to introducing new legislation from April 2013.

Other Budget announcements

Tax Simplification

The Government is proposing to allow small unincorporated businesses to use the cash basis of accounting. This will apply from April 2013 to businesses operating below the VAT threshold.

Tax Avoidance

General anti-avoidance rule

The HMRC’s interest in doctors shows no sign of diminishing. Now a General Anti Avoidance Rule is to be introduced in April 2013 to tackle ‘artificial and abusive tax avoidance schemes’. Draft legislation will be published as to what this means in practice and a consultation process will follow.

IR35

The so-called ‘IR35’ rules will be clarified and tightened up. These rules apply to individuals providing their services through limited companies. The updated rules will be published later this year and will apply from April 2013.

Cap on Tax Reliefs

From 2013, the maximum saving from certain types of tax relief will be capped. This will not apply to pension contributions or Enterprise Investment Scheme investments. The cap will be the greater of £50,000 and 25% of income.

Income tax and NIC rates and allowances for 2011/12 and 2012/13

This document is produced for general guidance only. Personal advice should always be sought before taking any action. No responsibility is accepted by the author or the publisher for actions taken or refrained from being taken as a result of reading this document. Tax legislation and interpretation change continuously and the information herewith is only accurate at the time of writing

Should you require any further information or advice arising from reading these guidelines please do not hesitate to contact your nearest AISMA member.

Prepared for AISMA by Moore and Smalley LLP

(c) Moore and Smalley LLP

The Spring 2012 issue of AISMA Doctor Newsline, the publication of the Association of Independent Specialist Medical Accountants, is published today with an essential mix of advice and commentary on the business of running a busy GP practice.

This month’s lead article is by specialist healthcare lawyer, Andrew Lockhart-Mirams, who describes new case law that could impact on restrictive covenants, used by GPs to protect their business, but now with the potential to handcuff them.

Practice management guru Kathie Applebee focuses on restructuring and redundancy in her article. While few practices would choose to make staff redundant, the unpalatable truth is that rising costs and falling income may well make this inevitable for some. Kathie’s advice could make the process more bearable for all concerned.

If your tax bill came as a nasty shock back in January AISMA chairman Bob Senior explains exactly why GPs are feeling the pinch, while pensions experts Gareth Rose and David Walker give their assessment of the impact of the new annual and lifetime allowances for pension savings and outline some tax planning options ahead.

Finally, there are some tax and profit-making tips for GPs and practice managers to ponder for the financial year ahead.

Bob Senior says: “This year’s tax bills were bad enough for many GPs, yet things could get even worse once the new rules on annual and lifetime allowances kick in. It is essential that doctors take steps now to understand their own position with regard to pension growth by talking to a specialist medical accountant.”

AISMA Doctor Newsline is available exclusively to clients of AISMA accountants.

Doctors wishing to contact their local AISMA accountant can find details on the find an accountant page of this website.

The Winter 2012 issue of AISMA Doctor Newsline, the publication of the Association of Independent Specialist Medical Accountants, is published today with an essential mix of advice and commentary on the business of running a busy GP practice.

With practice managers getting to grips with changes to the QOF, Kathie Applebee’s lead article on what’s new for 2012 will be welcomed by many. Giving a run-down of indicator changes and some tips on how to maintain high scores for your practice, this is a must-read article for all.

Elsewhere, Chris Howe gives an A-Z of tax planning to guide you in the lead up to the tax year end and solicitor Andrew Lockhart-Mirams discusses fixed retirement ages in partnerships and warns how they can lead to legal disputes on the grounds of age discrimination.

CQC registration expert Martha Walker gives an update on progress, with some welcome guidance that should help practices with their planning. Finally, David Walker brings some timely advice on pensions and the action GPs need to take now to manage the changes about to take place.

Deborah Wood, AISMA vice-chairman, says: “Running general practice is not going to get any easier in the coming year. It is essential that GPs and practice managers understand where their practice is now and what changes need to be made to maintain profitability. The articles in this issue of AISMA Doctor Newsline will help everyone plan for some tough times ahead.”

AISMA Doctor Newsline is available exclusively to clients of AISMA accountants.

Doctors wishing to contact their local AISMA accountant can find details on the find an accountant page.

The Association of Independent Specialists Medical Accountants (AISMA) is alerting doctors to letters sent in error by HM Revenue & Customs (HMRC) demanding action over failure to submit tax returns. This follows an announcement in November by HMRC that it will be sending final warnings to 2,500 doctors and dentists with unpaid tax bills. AISMA members have been contacted by several doctors whose tax returns have been received by HMRC, but have received a letter demanding outstanding information.

Liz Densley, AISMA Secretary and director at Sussex accountancy firm Honey Barrett, says: “Our client was alarmed to receive a letter from HMRC threatening potential fines and even criminal prosecution, despite his tax returns being up-to-date. When we called the Revenue to confirm this, we received no apology for the error, simply a confirmation that everything was in order.”

AISMA advises all doctors receiving similar letters from HMRC to talk to a specialist accountant immediately so that errors can be highlighted and outstanding issues resolved. Liz Densley says: “It is essential for doctors whose tax returns have not been submitted on time to address the situation immediately to avoid fines and prosecution.”

To find your nearest AISMA accountant go to the Find an Accountant page.

The Autumn 2011 issue of AISMA Doctor Newsline, the publication of the Association of Independent Specialist Medical Accountants, is published today with an essential mix of advice and commentary on the business of running a busy GP practice.

In this issue the focus is on CQC registration, with two must-read articles written by expert contributors, Martha Walker and Andrew Lockhart-Mirams. In the first, Martha Walker shows how practices can take advantage of the pause in the registration process by starting to prepare and gather evidence to demonstrate compliance.

Next, leading lawyer Andrew Lockhart-Mirams has a warning for GPs on the new legal traps arising from CQC registration and explains what the implications are for partnerships.

Regular Newsline columnist Kathie Applebee has some words of advice for practices considering a change in their computer systems while employment law adviser Janice Sibbald gives her ten top tips on how to avoid contractual disputes with your employees.

Mike Gilbert, AISMA committee member, says: “With pensions, commissioning and the new NHS bill leading the health agenda for many, GPs and practice managers must avoid the distractions and focus on the business of running their own practices. This latest issue of AISMA Doctor Newsline is full of practical advice to help practices stay ahead of the game.”

AISMA Doctor Newsline is available exclusively to clients of AISMA accountants.

Doctors wishing to contact their local AISMA accountant can find details on the find an accountant page.

Doctors are being warned to keep their tax affairs in first class working order as HM Revenue & Customs (HMRC) tightens its grip on the medical profession. Delegates at the annual conference of the Association of Independent Specialist Medical Accountants (AISMA) heard Bob Trunchion, tax principal at MacIntyre Hudson and member of the firm’s Healthcare sector group, outline the latest in a series of measures taken by HMRC that will pile the pressure on doctors.

These include a stringent late filing penalty regime, introduced in April this year. Replacing the standard one-off £100 penalty for late filing of self-assessment tax returns, a staged system introduces fines that mount up the longer the length of delay. Doctors sending their tax return one day late will pay £100 and then £10 a day up to a maximum of £900 for the first three months. Delays of six months mean doctors paying a further £300 or 5% of the tax due, which could be a considerably higher sum for doctors, and another £300 or 5% of tax due for 12 month delays. These penalties for late filing are in addition to the surcharges for late payment of tax and the penalties for errors in tax returns which can amount to 100% of the tax due in cases of deliberate understatement and concealment.

Bob Trunchion said: “HMRC put the medical profession under the spotlight last year with the introduction of the Tax Health Plan, which was an attempt to identify doctors who are deliberately avoiding tax. It has signalled its intention to keep a close eye on consultants and specialists who are increasingly likely to face enquiries and investigations.” Mr Trunchion said that if doctors do not have the evidence to support income and expenses, HMRC is likely to come down extremely hard.

Delegates at the AISMA conference heard Mr Trunchion describe different examples of how doctors could fall foul of HMRC rules, including the area of continuing professional development (CPD). While CPD fees would normally be considered an allowable expense, if the CPD led to an additional qualification it could be described as ‘betterment’ allowing the doctor the potential to earn more in the future. Consequently this could not be deemed an allowable expense. This was just one of several areas where doctors need to take care, said Mr Trunchion.

Luke Bennett, AISMA committee member and partner at accountancy firm Winter Rule, said: “Tax returns that include inaccuracies, through careless mistake or deliberate error, will incur substantial penalties that could be as much as 100% of the potential lost revenue. Doctors are facing unprecedented pressure from HMRC and should turn to a competent specialist medical accountant to help them keep their affairs in order.”

The Summer 2011 issue of AISMA Doctor Newsline, the publication of the Association of Independent Specialist Medical Accountants, is published today Monday 4th July with an essential mix of advice and commentary on the business of running a busy GP practice.

With practice income under serious threat in the months ahead, this issue opens with some indispensable advice from AISMA members on how practices can reduce expenses and boost earnings.

Practice management guru Kathie Applebee offers her thoughts on how outsourcing can help practices cut back on expenses, while specialist solicitor Andrew Lockhart-Mirams analyses recent legal proceedings that could herald yet more cost-cutting for PMS practices.

Finally, there is a warning for GPs to keep their tax affairs in first class working order as HM Revenue and Customs tightens its grip on the medical profession.

Bob Senior, AISMA Chairman, says: “While GPs are understandably concerned about proposed increases in pension contributions and retirement age, they need to focus now on how higher taxes, due to bite in 2012, will reduce their after tax income. Improving operating efficiency now will go a long way to relieving the pain and GPs need look no further than this issue of AISMA Doctor Newsline for advice on how to do that.”

AISMA Doctor Newsline is available exclusively to clients of AISMA accountants.

Doctors wishing to contact their local AISMA accountant can find details here.

The Spring 2011 issue of AISMA Doctor Newsline, the publication of the Association of Independent Specialist Medical Accountants, is published today with an essential mix of advice and commentary on the business of running a busy GP practice.

Leading with a round-up of tips from AISMA accountants from all around the country on how to ease the tax burden in the months ahead, AISMA Doctor Newsline also focuses on GP commissioning with articles from leading solicitor Andrew Lockhart-Mirams and Kathie Applebee, primary care organisation psychologist.

While Andrew Lockhart-Mirams analyses some of the problems currently being experienced by Consortia, Kathie Applebee explains how choice of consortium can affect practice income. Also looking at the changes ahead, chartered surveyor Chris Johnson has some advice on how GP premises can play a role in helping GPs to meet new demands and generate additional income.

Deborah Wood, AISMA Vice-Chairman, says: “The focus on commissioning in this issue of AISMA Doctor Newsline provides some valuable insight into how practices can get involved and plan for the significant changes looming in primary care.”

AISMA Doctor Newsline is available exclusively to clients of AISMA accountants.

Doctors wishing to contact their local AISMA accountant can find details here.

GPs have condemned the government in Scotland for wasting millions of pounds of scarce NHS resources on a ‘worthless’ health promotion campaign.

Doctors at the Scottish annual GP conference today voted unanimously that the Scottish Government’s campaign, Life Begins at 40, is a waste of money.

They agreed the campaign did nothing to address inequalities and used money that was vitally needed elsewhere within the health service.

One GP, Dr Steve Haigh, of Lothian, complained: ‘This project encourages people over 40 to check on their health by accessing an online questionnaire or speaking to an NHS 24 advisor to receive individually targeted health information. Surely the same is already available online and in every pharmacy and GP surgery across the country’.

He said the ‘40’ target was ‘random’.

10 MARCH 2011

The Association of Independent Specialist Medical Accountants is warning some GPs to expect an additional burden of pension administration following proposed changes to pension regulations. Full time GPs aged 50 or over, particularly those paying added year pension contributions, are most likely to be affected by the changes. The new rules state that GPs with an uplift in excess of £50,000 in their annual pension value must receive an NHS Pensions Agency (NHSPA) valuation certificate no later than 6th October after the end of the tax year. This is so that tax adjustments can be made in tax returns due by 31st January and will probably require the GP to submit a certificate of pensionable profits to their PCT by 6th June. The current deadline is 28th February, eight months later and only after practice accounts have been finalised and tax returns submitted.

Deborah Wood, AISMA vice-chairman and head of healthcare services at Moore and Smalley, said: “It is impossible for GPs with practice year ends of 31st March to complete their accounts, tax returns and pension certificates by 6th June. The only solution will be for them to submit an estimated certificate of pensionable profits and this will require a significant amount of work on their behalf by their accountants.”

GPs will be penalised twice as a result of the proposed change in regulations. As well as paying a fee to their accountants for the additional work required in preparing the estimated certificate, they will also need to pay the NHSPA for a corrected valuation once the final certificate of pensionable profits has been submitted. Ms Wood understands that this fee could be hefty. As the tax position may change as a result of the corrected information this may also require amendments to tax returns, possibly incurring penalties and interest charges payable to HMRC. In addition the transitional rules for the 2011/12 tax and pensions year extend the deadline for the NHSPA report to 6th October 2013 which is a considerable time after the 31st January 2013 due date for filing the tax return.

Ms Woods said: “The proposed change in regulations has resulted in a set of pension rules that are not fit for purpose for GPs. Over the coming months AISMA will be in dialogue with the NHSPA and British Medical Association with the aim of establishing a fairer process that puts a stop to GPs having to pay unnecessary fees.” AISMA will also be monitoring PCTs’ performance in processing pension certificates to the required deadlines as they deal with the effects of the Health and Social Care Bill.

AISMA is advising GPs to consult with their accountants to find out if the annual increase in their pension value is likely to exceed £50,000. Doctors wishing to contact their local AISMA member for further advice can find details on the AISMA website.