- Posted Monday August 24, 2015
A second budget within a calendar year is highly unusual; however the chancellor unveiled the first Conservative-only Budget in nearly 20 years announcing a series of bold measures affecting business, tax and welfare. Many elements of the second budget will affect the GP Practice.
Key Points for Practices
Annual investment allowance currently at £500,000 will reduce to £200,000 from 1 January 2016. Nevertheless for the majority of practices this limit will cover any new capital additions not reimbursed, to enable GPs to receive 100% tax relief on items such as fixtures, fittings and computer additions. However if any new surgery builds or major refurbishment work is to be undertaken, timing is therefore key to maximise available tax reliefs.
Tax free personal allowance
The Tax free personal allowance will increase to £11,000 and the higher rate threshold including personal allowance is set at £43,000. For GPs who are higher rate tax payers they will be able to receive up to £500 of interest from bank and building society accounts tax free. Basic-rate taxpayers will be eligible for the full £1,000.
Changes to the way dividends are taxed
Major changes will be made to the way dividends are taxed from April 2016, which will affect many GP’s and consultants who have formed a limited company for their private income. Proposals state that the first £5,000 of dividends will be tax free, but thereafter, basic rate tax payers will pay income tax at 7.5%, and higher rate tax payers will pay 32.5% and additional rate taxpayers will pay 38.1% with no basic rate tax credit given. It is essential that planning is undertaken when looking to extract profits from a limited company.
For those clients who run a pharmacy through a limited company and are looking to acquire a new pharmacy, changes have been made to withdraw corporation tax relief for businesses goodwill amortisation. However the corporation tax rate will be reduced from April 2017, but if you are looking to buy or sell a pharmacy, you should take immediate advice on the structure of the transaction to ensure all available reliefs can be claimed.
Major pension reform for annual allowances will push more GP’s into taking 24hr retirement, becoming deferred members, or opting out of the scheme due to the introduction of a reduced annual allowance for top earners with incomes over £150,000.
Minimum wage increase
The introduction of a new National Living wage from April 2016, in the form of a premium on top of the National minimum wage, will be introduced for workers aged 25 and above. Initially set at £7.20, this is expected to rise to over £9 by 2020. However for apprentices the employer national insurance contributions, to the upper secondary threshold for apprentices aged under 25, will be abolished.
For more information and guidance on controlling, monitoring and forecasting practice finances, RMT have worked alongside Thornfields to update the Annual Finance and Contract Update workshop and guide.
Alternatively, RMT has a 20+ team dealing exclusively with up to 100 GP Practices in the UK, as well as many other healthcare professionals including locums and consultants, and offer fixed fee services, based on your circumstances, including looking at tax planning options where available.If you would like to discuss how RMT could assist with your affairs, please contact Richard Humphreys on 0191 2569500 or visit www.rmthealthgroup.co.uk .