NHS PENSION CHANGES SEMINAR - 28 FEBRUARY 2012

Lentells Healthcare Directors Andrew Spear FCCA Jo Fursman FCCA Jane Jordan FCCA

Lentells Healthcare Team Based in Chard Act for over 120 GP practices Experienced staff

TAX ON EXCESS OVER ANNUAL ALLOWANCE (AA) If likely to exceed AA include estimate on 2011/2012 Tax Return 2011/2012 Tax Return submitted by 31 January 2013 Tax on AA excess payable 31 January 2013 (if > £2,000 payable by Pension Scheme) NHS Certificate due 31 October 2013 Interest calculated from 1 February 2013 if underpaid No penalty if reasonable estimate on 2011/2012 Tax Return

3 year c/f of any unused allowance Cease added years/AVCs/additional pension Reduce earnings Cease contributions but defer drawing pension 24 hour retirement (beware abatement if under 60) Review/cease private pension scheme contributions OPTIONS TO AVOID ANNUAL ALLOWANCE TAX CHARGE

LTA = pension x 20 + lump sum LTA of £1.5m normally exceeded if pension > £65,217 Tax on excess pension at 25% Tax on excess lump sum at 55% Tax payable when retire TAX IF EXCEED LTA

EMPLOYEE CONTRIBUTION RATES 2011/2012 < £21, % £21,176 - £69, % £69,932 - £110, % > £110, %

PROPOSED EMPLOYEE CONTRIBUTION RATES 2012/2013 < £21, % £21,176 - £26, % £26,558 - £48, % £48,983 - £69, % £69,932 - £110, % More than £110, % Aim to increase top rate to 14% by 2015

Superannuable 2011/ /2013 Increase Increase net Profits of tax (40%) £50,000 £3,250 £4,450 £1,200 £720 £100,000 £7,500 £9,900 £2,400 £1,440 £150,000 £12,750 £16,350 £3,600 £2,160 COST OF INCREASED CONTRIBUTIONS

INCREASED SUPERANNUATION CONTRIBUTIONS Based on superannuable profits (excludes non NHS work) Does not increase pension benefits No increase in 14% employer’s contributions

CALCULATION OF SUPERANNUABLE PROFITS Superannuation Certificates based on individual Tax Returns Incorporate accounts ending in tax year Exclude non NHS income Band calculation includes:- Practice profits Out of hours Bed fund (but not other hospital appointments) Locums PEC

RECONCILING PAYMENTS ON ACCOUNT Complete estimate of pensionable profits form 2012/2013 by March 2012 Payments on account made April 2012 to March 2013 Superannuation certificate due February 2014 Superannuation certificate incorporates correction of POA’s at incorrect rate Balancing refund/payment due March 2014

ADDITIONAL NHS PENSION CONTRIBUTIONS Added years closed to new entrants - Some capped at £129,600 for 2011/2012 Additional pension - £250 - £5,000 of extra pension - Lump sum or monthly payments AVC’s - Lump sums or regular amounts - Invested outside NHS

TAX RELIEF ON PENSION CONTRIBUTIONS Tax relief for employees, employer’s, added years, additional pension, AVC’s and private pension scheme contributions Tax relief at date of payment Balancing payment delays tax relief Not deducted in calculating National Insurance Contributions Private pension scheme contributions normally attract 20% tax relief at source

24 HOUR RETIREMENT RULES Retire for at least 1 day Work less than 16 hours per week for 1 month Stop paying into NHS Pension (including hospital appointments) Advise PCT

24 HOUR RETIREMENT PRACTICAL ISSUES Sole practitioners Legal deed to guarantee return Higher drawings available (in lieu of superannuation contributions) Superannuation certificate still required to calculate seniority Delay in superannuation balancing payment/refund If return part-time, reduced profits may affect seniority entitlement Higher tax bills

ISSUES FOR FULL RETIREMENT Final tax bill delay Final tax bill if non-March year end Tax relief on final superannuation balancing payment

Any Questions? Jo Fursman – Jane Jordan – Andrew Spear –

DISCLAIMER These presentation notes are for guidance only. We recommend professional advice should be obtained before acting on any information contained in them.