Doctors' News

DOCTORS’ UPDATE

Now that the season for completion of Tax Returns and (for GPs) Annual Superannuation Certificates for 2010/11 is over, we can all relax a little, look back to see if there are any lessons to be learned, and look forward to try to anticipate future issues which may arise.

2010/11 was the first year of the 50% tax rate on taxable incomes in excess of £150,000 and of the progressive loss of the personal allowance on taxable incomes over £100,000. These two changes had a significant impact on tax liabilities in January 2012 and will, of course, on future liabilities.

Doctors’ pensions are rarely out of the news these days and 2011/12 heralds the introduction of a £50,000 Annual Allowance cap on ‘pension input’, so that any excess added to a doctor’s pension ‘pot’ is taxed at his top marginal rate. Calculation of the ‘pension input’ of a GP is something of a problem and, although the Pensions Agency will be able to provide a figure, it is not obliged to do so until October 2013, 9 months after the deadline for submission of the relevant Tax Return. This issue should be raised with your accountant or independent financial adviser.

In addition to the Annual Allowance referred to above, the Lifetime Allowance reduces in 2012/13 from £1.8m to £1.5m. This poses further potential problems, with any excess taxable at 55%. Again, advice should be sought from your accountant or independent financial adviser.

Also for 2012/13, the employee’s superannuation contributions increase, with 7 tiers instead of the previous 4, with a top rate of 10.9% instead of the previous 8.5%. This change, together with the tax changes referred to above, could significantly reduce doctors’ disposable incomes.

Clearly, with increased superannuation contributions and increased tax bills, good tax planning advice is important. As members of AISMA (Association of Independent Specialist Medical Accountants) you can rely on us to provide specialist advice on all areas affecting doctors, both GP’s and hospital consultants. We offer a free, no obligation initial consultation to discuss any taxation matters which affect you. Contact Ian Davies on 0121 550 9916 or email iand@nicklins.co.uk to arrange a meeting.

March 2012