With a number of years’ experience in assisting GP and medical practices with a full range of accountancy services, we are able to provide expert advice tailored specifically for the medical sector - from financial performance management to tax planning advice.
Our specialist healthcare team understand the critical financial challenges surrounding the medical sector, including:
Mergers and collaborations
Growing financial and bureaucratic pressure is forcing GP practices to explore mergers and federations to increase capacity, share the bureaucracy and reduce the risk of losing GMS contracts and PMS agreements in the event of a contractor’s death or retirement. To ensure any merger brings the expected financial rewards, the long-term financial viability of the merger, including any costs such as redundancy, needs to be evaluated through forecasting and financial modelling.
Collaborative working can bring greater rewards for the patient and the practice but GPs need to make sure they do not incur unexpected tax liabilities or legal obligations by not seeking professional advice.
The NHS Pension Scheme 2015
The introduction of the new NHS Pension Scheme in 2015 has added a further layer of complexity to the already complex world of NHS pensions. Being technically self-employed, GPs must monitor their own contributions to the scheme to ensure that all sources of income are declared in accordance with NHS pension scheme rules. The tax liabilities of GPs has become more problematic with many GPs breaching the annual and lifetime allowance thresholds, and potentially facing unexpected tax bills. It is important that regular forecasts are obtained and monitored against thresholds to ensure your retirement plans shape up as expected.
The introduction of the government’s auto enrolment (AE) legislation, due to affect smaller employers between 2015 and 2017, places new obligations on GP practices. GPs and practice managers need to be aware of and prepared adequately for AE - staging dates and worker categories need to be understood to ensure compliance and avoid fines.
Tax relief and capital allowances
General practice faces a tough financial climate and income needs to be maximised. However, opportunities to claim tax relief in the form of capital allowances are sometimes being overlooked. Some of the costs associated with projects such as a new-build surgery or extension, a surgery purchased long ago, and even certain professional fees can be recovered. Meticulous tax planning will ensure maximum revenues and profitability.
Shrinking income and rising expenses, particularly salaries, National Insurance and superannuation, squeeze partners’ monthly drawings, causing uncertainty over earnings and likely profit share. The same applies to any expected or unexpected changes such as the loss of a partner, annual contract changes or changes to session numbers or parity arrangements. An annual drawings forecast or policy will consider the complexities of GP income streams, ensure you are focused on the most profitable income sources, offer clarity and peace of mind, and even out earnings through the year.
Tax compliance and investigations
As GPs look to increase their earnings potential by taking on outside work it is important to remember that your tax return must contain details of all sources of income. Expense claims are regularly reviewed by HMRC and while inquiries in this area might not hit the headlines as much as undeclared income they are very lucrative for the tax authorities.
Maximising use of tax exemptions
Every year, tax payers enjoy something called their ‘annual exempt amount’ which currently means that tax is not payable on the first £11,000 of capital gains. Unused exemptions cannot be carried forward to the next tax year. Therefore, careful tax planning and the timing of how you dispose of this allowance will ensure you are tax efficient and avoid any traps. Placing income-generating assets into a lower earning spouse’s name or owning them equally will also spread the tax charge into lower tax bands and uses allowances that might otherwise be wasted.
Tax and superannuation savings can sometimes be made by considering the use of companies for certain practice activities. Practices with high levels of non-NHS income (e.g. from property) could be suited to tax planning that protects profits from higher rates of tax. However, profits need to be retained within a company structure and the personal tax status of the company owners also needs careful treatment.
From partnership agreements, tax planning and benchmarking practice performance, to preparation of GP practice accounts and wealth management, we offer the full spectrum of accountancy and business advisory services to the medical sector.
Here are some of our clients explaining how we have been able to help them:
Our memberships of the Association of Independent Specialist Medical Accountants (AISMA), a national network of accountancy firms acting for medical practices, and the Specialist Medical Accountancy Services (SMAS) Group, ensure we are in touch with developments in the wider medical profession.