Practice Management: how to manage next year’s tax bills
March 13, 2017
AISMA accountant Luke Bennett explains why practice managers need to take action now to plan for bigger tax bills for some of their GP partners in January 2018 when the impact of changes to the pension annual allowance will be felt for the first time. Read the article in the March issue of Practice Management or click here to download the full article
AISMA response to Spring Budget
March 9, 2017
James Gransby, a member of the AISMA Executive Board and head of healthcare at MHA MacIntyre Hudson, said: “For GPs partners already under financial pressure from high rates of tax and suffering from attacks on their pensions in recent years, the news that their main rate of class 4 national insurance contributions will rise by 2% over the next two years from 9% to 11% will be a bitter pill to swallow. Not least because this all but wipes out the promised income increases recently announced in the 2017/18 GP contract review.”
He added: “For locums the fall in the tax free dividend allowance from £5,000 to £2,000 per year from April 2018 will be a blow for those operating through a limited company and follows hot on the heels of a 7.5% increase to dividend rates that they are already reeling from. The tax cost of this change for a husband and wife owning shares in a limited company who are both higher rate taxpayers will be £1,950 per year, and more for additional rate taxpayers.”
Pulse: GPs could have to pay locum tax and NIC under new legislation
March 6, 2017
GP practices could be caught up in new tax legislation aimed at stopping contractors using companies to pay lower tax and national insurance contributions, medical accountants have warned. Read AISMA chairman Bob Senior comments on the Pulse website. Click here to read the full article.
Capita’s electronic pension certificate submission system ‘full up’
February 27, 2017
Accountants are currently receiving a ‘mailbox full’ message when they attempt to submit pension certificates via the online system provided by primary care support provider Capita. The deadline set by Capita for the receipt of certificates is Tuesday 28 February. This is to ensure certificates are processed by the end of the tax year on 5 April.
Andrew Pow, speaking on behalf of the Association of Independent Specialist Medical Accountants (AISMA), said: “AISMA members across England are reporting issues with Capita’s system. At this stage the only solution is for the certificates to be submitted by courier or recorded delivery. It’s very frustrating and to have the system fail just before the submission deadline is unacceptable.”
AISMA members are reporting that they are unable to establish which certificates have been safely received through the online system and which have failed to arrive.
Estimates of pensionable pay for 2017/18 also have to be submitted via the same online system by the same deadline. Mr Pow said: “If Capita doesn’t pick up these estimates then pension contributions for the next financial year will be calculated on the wrong basis. For many GPs this will mean contributions will be too low and there will be a massive adjustment to pay when balancing payments are due. Equally, other GPs will be paying too much and practice cashflow could be affected.”
Pulse: more from AISMA accountants on 2017/18 contract
February 14, 2017
Pulse: AISMA chairman comments on 2017/18 GP contract
February 10, 2017
Accountants warn GP partners to expect higher tax bills in 2018
January 31, 2017
Higher earning GP partners may have substantially higher tax bills to pay in 2018 and should start planning now. With doctors due to pay their January 2017 tax bills today, the Association of Independent Specialist Medical Accountants (AISMA) is warning GP partners to prepare for the worst this time next year when the impact of changes to the annual allowance last year will be felt for the first time.
The annual allowance is the increase in value of a GP’s pension each year before more income tax is charged. It was lowered on a sliding scale down to £10,000 for the highest earners in April 2016. For these doctors, if the growth in pension benefits exceeds the annual allowance, the excess will be taxed between 40% and 45%.
Luke Bennett, AISMA committee member and partner at accountancy firm PKF Francis Clark, said: “By our reckoning one in ten GPs will be affected and the sums involved are pretty hefty. I have been warning some of my GP clients to expect additional tax charges of over £20,000.” He continued: “Normally when you pay more tax it’s because you’ve earned more money. But there will be no more money in GPs’ pockets to pay next year’s tax bill than there was this year.”
GPs can elect for the NHS pension scheme to pay some of the tax on their behalf but maximum limits apply and many will still have to find large sums of cash to pay the tax.
Mr Bennett says his GP clients are looking at various options to cope with the financial hit in 12 months’ time. “Some are starting to save now, while others are looking at ways of lowering their income to bring the tax charge down. There’s also the option of coming out of the NHS pension scheme or dipping in and out of the scheme and putting aside the contributions to pay the tax bill when it arrives.”
He added that there are no ‘one size fits all’ solutions since all GPs will be in a different position. “It’s essential to work with a specialist accountant who can advise you on the tax position and also a financial planning adviser who has specialist knowledge of the workings of the NHS pension scheme.”
Practice Management: January 2017
January 16, 2017
Ready for more locums in your practice? In this month’s issue of Practice Management magazine, AISMA accountant Barry Rigby has an update for practice managers on how to manage locum pay, tax and pension contributions. Click here to download the full article
Pulse: Mitigating the potential risks of federating
January 3, 2017
Practice Management: Managing cash flow
December 5, 2016
In this month’s issue of Practice Management magazine, AISMA accountant Phil Harnby explains that long-term planning is key to avoiding unnecessary cash flow problems in the practice. Click here to download the full article