www.bakertilly.co.uk financial planning & nhs pension scheme calderdale royal hospital 8 april...
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www.bakertilly.co.uk
Financial Planning & NHS Pension Scheme
Calderdale Royal Hospital
8 April 2014
Financial planning
Self employed tax and national insurance
Expense claims
GP Partners
NHS Pension Scheme
Our clients
Baker Tilly medical services
Self Employed Tax & National Insurance
Register with HMRC (Fine system)
Decide on accounting period end
National Insurance Contributions (NIC)
• Class 1
• Class 2 (NICO)
• Class 4
Income tax under self assessment
Student loans
Employed as salaried GP
Companies
Self Employed Tax & National Insurance
Tax Return
2013/2014 covers 6 April 2013 to 5 April 2014
Filing deadlines
• On line 31 January 2015
• Paper 30 September 2014
Tax payments – the nasty bit !
31 January and 31 July (poa)
Good cashflow initially
Mechanics
Self Employed Tax & National Insurance
Tax Savings
A set proportion of net income – 35% - 40% as a guide
Choices
Own bank account
Spouse bank account
Offset mortgage
Others – e.g. ISA’s/Premium Bonds
Please note self employed earnings should be declared when work undertaken rather than when monies received
Self Employed Tax & National Insurance
Tax Payments
e.g. commence as a locum in August 2014 and prepare accounts to 31
March
• Period ended 31 March 2015 locum earnings of £40k
• Year ended 31 March 2016 locum earnings of £60k
• Year ended 31 March 2017 locum earnings of £80k
• Assume all tax payable at 40%
2014/2015 Period ended 31 March 2015
40,000 @ 40%
31 January 2016 16,000
Self Employed Tax & National Insurance
Tax Payments
2015/2016 Year ended 31 March 2016
60,000 @ 40%
31 January 2016 (2014-15) Bal 16,000
31 January 2016 POA 8,000
24,000
31 July 2016 POA 8,000
Self Employed Tax & National Insurance
2016/2017 Year ended 31 March 2017
80,000 @ 40%
31 January 2017 24,000
Less: POA (16,000)
8,000
2016/2017 First POA 12,000
£20,000
31 July 2017 POA 12,000
Claiming for Expenses
Superannuation contributions – more later
Professional indemnity insurance & subscriptions
Car
Home is base for locums
Mileage log for business journeys
Fixed rate claim (if income < VAT threshold)
Business use proportion
Surgery is base for Partners
General use of home as office (HMRC Amnesty)
Have you made claims for tax relief in relation to professional subscriptions?
Claiming for Expenses
Others
Mobile telephone
Internet
Courses & training
Postage & stationery
Computer equipment
Medical consumables
Spouse salary
Others
N.B.Tax relief on AKT & CSA examination fees paid since 2009 may be available
Example Locum Income & Expenditure Account
LOCUM & PRIVATE FEES INCOME & EXPENDITURE ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2014
2014 2013
£ £ £ £
INCOME 57,000 50,000
EXPENDITURE
Computer Expenses (Proportion) 40 80
Conferences & Courses 1,100 300
Legal & Professional Fees 900 1,000
Motor Expenses 1,200 980
Printing, Postage & Stationery 100 80
Professional Indemnity Insurance 6,000 5,500
Professional Subscriptions 1,200 1,100
Telephone & Mobile (Proportion) 150 140
Use of House (Estimated at £5 per week) 260 260
10,950 9,440
NET SURPLUS FOR THE YEAR £ 46,050 £ 40,560
Claiming for Expenses
Record Keeping
Ease of identification
Dedicated bank account (spare)
Business credit card
Retention of records for ~ 7 years
Tax return details
• Income taxed at source
• Investment income
• Personal pension contributions
• Buy to let properties
• Share dealing
GP Partners
Types Salaried Fixed share Equity (possible parity build up)
Responsibility for tax – draw gross or netAccounting year end variesSurgery ownership
Notional Rent Loans
Partnership agreementCurrent/capital accounts (cashflow funding)
Summary – Good Habits Reminder
Register as self employed with HMRC
Save (in a separate account) 35% - 40% of income to cover future tax liabilities
Keep all your receipts
Maintain a mileage log
Use a separate credit card for business expenses
Retain your records for ~ 7 years
Employ a specialist medical accountant
NHS Pension Scheme
Officer scheme – Final salary
Practitioner Scheme – Dynamised career average earnings
2008 Scheme
2015 Scheme - More changes to come
NHS Pension Scheme
Legal requirement for GP’s to complete pension forms
Type 1 Certificate of pensionable pay – GP’s in Practice
Type 2 Certificate of pensionable pay – Salaried GP’s; Career OOHs; GP’s
Locum A & B forms. – Locum GP’s
From 1 April 2014 GP Locums may pension appraisal work via forms A & B
Form GP Solo – OOH ;GPWSI, CCG ; Ad hoc NHS income
NHS Pension Scheme
If a freelance GP locum is working through a locum agency or is trading as
a limited company they CANNOT be in the NHSPS.
If a freelance GP locum is working through a matchmaking agency they
can pension their income.
From 1 April 2013 the GP locum (14%) employer contributions have been
paid by the relevant commissioning Practice and not the CCG/LHB.
When the GP locum is paid their fee the commissioning Practice will also
pay over 14% employers contributions to the GP locum. The locum GP will
then be responsible to forward all contributions as well as pension forms A
& B.
Example Locum Invoice
CALCULATION OF INVOICE FOR LOCUM WORK
DATES : 1,2,3 7,8 April 2014
ITEM RATE NUMBER SUB-TOTAL£
2.5 hr surgery 260 5 1,300.00Home visits 25 3 75.00
Sub Total 1,375.00 A
Pensionable income£1,375.00 x
90% 1,237.50
Add : Employers pension at 14% of pensionable income 173.25 B(£1237.50 x 14%)
TOTAL (sub total plus employers pension - A+B) £1,548.25
Tiered superannuation rates
Proposed 2014/2015 Contribution rates before tax relief (gross)
Full-time pay Contribution rate (before tax relief)
2013/2014 (gross)
Contribution rate (before tax relief)
2014/2015 (gross)
Contribution rate increase 2014/2015 (percentage points)
(gross)
<15,431.99 5% 5% 0
15,432.00 – 21,387.99 5.3% 5.6% 0.3
21,388.00 – 26,823.99 6.8% 7.1% 0.3
26,824.00 – 49,472.99 9% 9.3% 0.3
49,473.00 – 70,630.00 11.3% 12.5% 1.2
70,631.00 – 111,376.99 12.3% 13.5% 1.2
111,377.00 and over 13.3% 14.5% 1.2
Tiered superannuation rates
Example 1Pensionable Earnings £49,472 £49,473Tier rate (2014/15 Provisional rate) 9.3% 12.5%
Employee Contributions £4,601 £6,184
Equates to additional contributions of £1,583
Example 2Pensionable Earnings £70,630 £70,631Tier rate (2014/15 Provisional rate) 12.5% 13.5%
Employee Contributions £8,829 £9,535
Equates to additional contributions of £706
Locum A Form
Locum B Form
Type 2 Medical Practitioner - 2013/14 Self Assessment Form
Type 2 Medical Practitioner - 2013/14 Self Assessment Form – cont’d
Remember
Ensure monthly forms are submitted
Retain copies of forms submitted
Monitor your income levels
Non Compliance
Engaging an Accountant
Background details
Money laundering checks
Hold a meeting
HMRC 64-8
Letter of Engagement
System of checklists
Bookkeeping requirements
Regular communication – tax due dates
Likely cost – Locum and Salaried GP (tax relief)
Baker Tilly medical services
Baker Tilly acts for over 350 GP practices nationwide
Local Yorkshire, Lincolnshire and North West team of medical
specialists
Annual performance review
Fixed fees agreed in advance
Regular meetings to discuss and resolve current issues
Unlimited telephone support
No obligation initial meeting
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Richard Apps Charles NicholsonPartner, Medical Services Associate Director, Medical [email protected] [email protected]
2 Wellington Place 3 Hardman StreetLeeds Manchester LS1 4AP M3 3HFTel: 0113 2445451 Tel: 0161 830 4000