Financial Planning & NHS Pension Scheme

1. Financial Planning & NHS Pension Scheme Calderdale Royal Hospital 8 April 2014

2. Financial planning • Self employed tax and national insurance • Expense claims • GP Partners • NHS Pension Scheme • Our clients • Baker Tilly medical services

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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?

10. 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

11. Example Locum Income & Expenditure Account

12. 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

13. GP Partners • Types • Salaried • Fixed share • Equity (possible parity build up) • Responsibility for tax – draw gross or net • Accounting year end varies • Surgery ownership • Notional Rent • Loans • Partnership agreement • Current/capital accounts (cashflow funding)

14. 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

16. NHS Pension Scheme • Officer scheme – Final salary • Practitioner Scheme – Dynamised career average earnings • 2008 Scheme • 2015 Scheme - More changes to come

17. 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

18. 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.

19. Example Locum Invoice

20. Tiered superannuation rates

21. Tiered superannuation rates

22. Locum A Form

23. Locum B Form

24. Type 2 Medical Practitioner - 2013/14 Self Assessment Form

25. Type 2 Medical Practitioner - 2013/14 Self Assessment Form – cont’d

26. Remember • Ensure monthly forms are submitted • Retain copies of forms submitted • Monitor your income levels • Non Compliance

27. 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)

28. 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

29. Richard Apps Charles Nicholson Partner, Medical Services Associate Director, Medical Services richard.apps@bakertilly.co.uk charles.nicholson@bakertilly.co.uk 2 Wellington Place 3 Hardman Street Leeds Manchester LS1 4AP M3 3HFTel: 0113 2445451 Tel: 0161 830 4000