Posted On July 26, 2017 By mhauk
Annual Allowance Pension Charge for GPs
Each year you are only allowed to contribute a certain amount to a pension on which you get tax relief. For GPs this is even more complicated, regardless of the amount paid, the allowance available is measured against the increase in value of your pension pot. Therefore, there is a charge to tax when pension savings for the tax year (increase in value of the pension fund) exceeds this annual allowance for the year. The current allowance is £40,000, although this will be subject to restriction if the value of your total income plus the increase in your pension pot exceeds £150,000. Then the allowance of £40,000 will reduce by £1 for every £2 over the £150,000. Once your income plus annual increase in pension exceeds £210,000, the allowance is restricted to £10,000. The allowance can be increased by any unused relief brought forward (for a period of up to 3 years). It is important to note that the NHS Pensions Agency takes a long time to issue pensions savings statements after processing the GP certificates of pensionable profits each year and these are not normally available when we prepare your tax return.
NHS Pensions will no longer provide the pension forecasts to accountants as these have been made available as Total Reward statements to members of the scheme. As accountants, we are unable to access these statements and therefore it is important that you access them each year and forward copies when providing your tax return information. Statements up to 31 March 2016 should be available to access from July 2017.
If you don’t provide the statements to your adviser, your tax return could be wrong and you may be subject to interest and penalties by HM Revenue & Customs for submitting an incorrect tax return.
You can access the Total Rewards statement online by using the Government Gateway service. When you access the website and click ‘log in/register’ you will be asked to register for a Government Gateway ID if you have not already done so. Once your registration is complete, you must then enrol for the TRS service to be able to access your Total Reward Statement at any time. If you already have a Government Gateway ID, you can use those details to enrol for the TRS service. More details and where to find support can be found on the TRS website.
Locums – Employment Issues
Locum procedural reminder – PAYE audits undertaken by the HM Revenue & Customs (HMRC) now include “status review” which has special emphasis on locums. HMRC uses the strict definition of locum, being “in the place of”. Appropriate records should therefore be kept (e.g. dates of attendance, partner being covered and reason) in order to justify any such payment. Any long term use of the same locum could see their status challenged. If there is a challenge to the status of a locum, HMRC will seek to reclassify them as an employee and subject the practice to PAYE and National Insurance which could work out to be more than that paid by the locum personally.
It is the responsibility of the practice to determine the status of any locums that are engaged and not the decision of the locums themselves. HMRC have an online status indicator tool which can be used to help assess the employment status of an individual.
If you engage with any locums via a limited company you will now also need to assess whether you should operate PAYE and National Insurance. This new measure, “Off-payroll working in the public sector” moves responsibility for deciding if the off-payroll rules for engagements in the public sector apply from an individual worker’s intermediary to the public authority, agency, or third party paying the intermediary. The measure makes that public authority, agency, or third party responsible for deducting and paying associated employment taxes and National Insurance contributions to HMRC.
You will need to assess whether any locums you engage via a limited company will be subject to this and again you should use the employment indicator status tool to help you assess if you are liable to deduct this tax from the company.
If you have any questions or would like to discuss any of the issues raised with us in more detail, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Healthcare team.
This article originally appeared on the blog of our member firm, Broomfield & Alexander.