Dental News
Spring 2020
Welcome to our Spring 2020 Dental News
The Partners and staff at Humphrey & Co hope that all our clients and contacts are keeping well and staying safe. We would like to reassure you that Humphrey & Co continue to support you in this very unsettling time.
The Spring Dental News is split into two parts, firstly a general update which you may have seen if you subscribe to our general e-news and a second part for specific dental updates. Currently the situation is fast moving and information is constantly changing; the updates specific to dentists are as follows:
Associates NHS Pay 'at previous levels'
Associates NHS and Self-Employment Income Support Scheme (SEISS) claim
Mixed practices and duplicative support
2019/20 NHS reconciliation
Job Retention Scheme - Flexible Furloughing and important dates
Annual Reconciliation Report (ARR) / Net Pensionable Earnings (NPE)
Pension Annual Allowance
Technical and Client update
Following the latest announcement from the Government regarding the move into the next phase of managing the Coronavirus pandemic, we would like to update you as to how we at Humphrey & Co are continuing to support our clients and our staff, including adapting our working practices to accord with the Government guidelines.
Safety is paramount so our offices remain closed to client meetings but we continue to assist our clients and deal with new enquiries whilst working from home over secure connections. Also, since 18 May, following a comprehensive risk assessment of our offices in respect of the threat of Covid-19 in our workplace, we have a reception team member who will facilitate the delivery of records and documents. If clients would like papers delivered to the office, please liaise with your usual Humphrey & Co contact who will arrange for access at an agreed time, so papers can be safely and securely dropped off. If records need to be returned to clients whilst the office is closed to the public again please request this via your usual contact.
Where we would usually meet with you face to face we can arrange a meeting via video link using either Zoom or Skype. Rest assured that our reception team are taking calls as normal and we all have access to our emails so if you have any questions or concerns please either call the office during our office hours of 9am to 5.30pm Monday to Friday on 01323 730631 or email your usual contact.
All members of our technical team continue to keep abreast of the updates issued by HM Revenue & Customs (HMRC) in relation to financial support and initiatives; key updates with web links are on our Coronavirus Hub. Again, if clients wish to discuss how specific changes affect them or if assistance is required in claiming financial support (and agents are allowed to submit such claims to HMRC on behalf of clients) we are of course here to help.
We aim to provide more direct access to our offices and our team only when it is safe to do so. We will provide further updates once further Government guidance is issued.
New Partners
We are delighted to announce that our two Associates have become Partners this month.
Lewis Hampton and Mike Bryan have both been working for the practice for a number of years and their dedication to providing excellent service for their clients is being recognised with their progression to Partners within the firm.
Lewis joined us in 2010 and qualified as a Chartered Accountant and Chartered Tax Adviser in 2011 and 2017 respectively. Lewis is based in our Eastbourne office and acts for a broad range of clients located in different areas of the UK. He has a special interest in individuals and corporate bodies associated with the Lloyd’s of London insurance market and provides a number of specialist services including auditing, valuations and tax advisory and compliance.
Mike Bryan completed his honours degree in Accountancy & Finance in 2010; he then went on to study for his Chartered Accountant qualification which he achieved shortly after joining the firm in 2014. Mike has worked within the healthcare sector throughout his career and has expert knowledge and experience in this industry. He also presents seminars on accountancy and taxation to healthcare professionals and has provided healthcare updates to some of the leading UK banks.
Lewis said “I am delighted and extremely proud to be appointed a partner of the firm after many years of hard work. It has been my aim since starting my accountancy career to become a partner so I am pleased to have been able to achieve this with a firm like Humphrey & Co.
I’m looking forward to working with the other partners to drive the firm forward during this challenging time whilst continuing to provide an excellent service to our clients”.
“Joining the partnership in May 2020 was an immensely proud occasion” said Mike. “I would like to thank the partners for allowing me to achieve my ambition since embarking on a career in accountancy 10 years ago.
The partners continue to inspire and motivate our team by proving that hard work, motivation and sound knowledge can be rewarded with career progression.
I will continue to provide my clients with a pro-active and exemplary service, assist clients to overcome the challenges that COVID-19 presents and look forward to positively impacting the firm and my clients in the years ahead.”
Anthony Smith, Senior Partner comments “Succession within any professional services firm is critically important and we often plan years in advance to ensure a seamless transition for our clients and continuity of service. We also need new partners to fuel our continued growth especially in our niche areas.
Lewis and Mike have shown determination and ambition over the past 2 or 3 years especially, and we are delighted that they have now committed to Humphrey & Co for the long term. These are undoubtedly extremely challenging times, and as a partnership, we are confident both Lewis and Mike will skilfully guide our clients to calmer waters on the other side, and beyond.
We have big plans for them both and combined with their skill sets, we are excited about the future. In the meantime, all the existing partners offer their sincere congratulations. It’s just a pity we can’t celebrate together at this time in a more traditional fashion!”
Coronavirus Hub
During the Covid-19 crisis we have been updating our Coronavirus Hub with the information issued by the Government to support businesses and individuals.
We will continue to update the hub with the latest developments so please check back regularly. Alternatively you can follow us on our social media channels below:
The full range of support measures can be found at: www.gov.uk/coronavirus/business-support
Or find out what support is available by completing this survey: www.gov.uk/business-coronavirus-support-finder
Please contact us if you need help and advice in relation to any of the support schemes available to you.
Business and Tax Return records
We are encouraging all clients to provide their tax year end records as soon as possible, so we can better plan for forthcoming tax liabilities.
For our dental clients you will have received an email instructing you on how to provide this digitally. If you are unsure if you have received this request please email dentists@humph.co.uk and a member of the team will resend the instructions.
For all other clients please contact your usual Partner to arrange the transfer of digital records or the delivery of physical records.
Tax payments due 31 July 2020 – do you really need to defer?
In response to the Coronavirus outbreak, HMRC announced that taxpayers required to make a second payment on account towards their 2019/20 income tax liability by 31 July 2020 can defer their payment until 31 January 2021. The deferral is automatic, so there is no need to inform HMRC and no interest or penalties will be charged during the deferral period.
However, it must be appreciated that this is a measure to assist those suffering financial hardship due to the Coronavirus pandemic. HMRC expect taxpayers who have not suffered financial hardship and have sufficient funds available to make the payment on time and this remains the case despite the fact that the statements they are currently issuing show a due date of 31 January 2021 for the second payment on account.
Associates NHS Pay ‘at previous levels’
NHS Practices continue to receive their monthly payments at 1/12 of the contract value on condition that all staff, including Associates, continue to be paid at previous levels.
When calculating the payment, an ‘agreed and fair’ reduction for variable costs will be factored in once agreed by NHS England. This reduction in the baseline contract for Practices is to account for the reduced overheads that Practices have experienced whilst the Practice remains closed (i.e. materials, labs, utility costs).
Associates should be paid ‘at previous levels’ which indicates an average of their NHS income paid to them over the last 12 months (if practical). Some Practices are paying just 80% of NHS income to their Associates. Although this appears to be contrary to the CDOs guidance, it may be acceptable and agreed between the Practice and the Associate.
In return for this income, it is expected that staff are available to be redeployed to participate in the COVID-19 response.
However, some Associates may not be in a position to volunteer through choice or for reasons of self-isolation and potentially the NHS could seek to recover monies paid to Practices. In some instances, it may be appropriate for the Practice to withhold money due to the Associate but this should be communicated fully and a written statement should be provided. The BDA have launched a pay dispute resolution service to help Associates and Practice owners reach an agreement on NHS pay.
Associates NHS and Self-Employment Income Support Scheme (SEISS) claim
The launch of the Self-Employment Income Support Scheme (SEISS) has been generally well received by those earning under £50,000 and eligible for the scheme. It has also highlighted a potential issue for those self-employed Associate dentists eligible for the SEISS but also in receipt of ongoing NHS income.
Self-employed Associates are entitled to receive ongoing NHS income 'at previous levels', however some Associates will have seen their NHS income abated to 80% or potentially less. At the same time, Associates working partly in NHS and partly in private practice will have seen their income reduced, potentially significantly if they rely heavily on private income.
To qualify for the self-employed grant, you must “carry on a trade which has been adversely affected by coronavirus”. Given mixed practice Associates are unlikely to be receiving private income; a claim can be made on the basis that they are able to demonstrate that they have been "adversely affected by coronavirus".
These mixed practice Associates earning less than £50,000 (in 2018/19 or on average of the three years ended 2018/19) will be eligible to apply for the SEISS and continue to receive their NHS income. There is currently no guidance that suggests an Associate cannot receive both. The CDO has solely noted that Practices cannot claim Government support that is duplicative of the NHS’ ongoing financial support.
Ultimately an Associate could actually be financially better off if the combination of their ongoing NHS income and SEISS support exceeds their normal earnings. In this event, it is possible that any excess income will be repayable and therefore a proportion of monies should be set aside.
Applications to receive the first grant closes on 13 July 2020. The Chancellor, Rishi Sunnak has since announced that the scheme is going to be extended and applications for the second and final grant will open in August 2020.
If you are eligible and your business continues to be ‘adversely affected’ by Coronavirus then the grants available are as follows: -
- 80% of average trading profits (capped at £2,500 per month) for March 2020, April 2020 and May 2020
- 70% of average trading profits (capped at £2,190 per month) for June 2020, July 2020 and August 2020
Mixed practices and duplicative support
NHS England have recently clarified that mixed practices do have access to government support schemes (such as the Coronavirus Job Retention Scheme) on a proportionate basis. Mixed practices should ensure that any potential claim is restricted to their proportion of private income of the practice. The methodology for calculating this proportion is similar to working out rates reimbursement.
It is expected that as part of the 2020/21 reconciliation process, practices will be expected to declare that they have not applied for any duplicative government funding and provide evidence of the proportions of NHS/private income used in any applications for additional support.
It is unclear at the moment as to what the mechanism will be in order to repay any amount relating to the NHS proportion, however it is likely that this will be via a clawback after the 2020/21 NHS reconciliation.
2019/20 NHS reconciliation
It has recently been confirmed by the NHS that target UDAs will be calculated by taking the higher of: -
- UDAs performed in the year to 29 February 2020
- UDAs performed in the year to 31 March 2020
- UDAs performed in the 11 months to 29 February 2020 plus the average of any three month period within 2019/20 (however this needs to be agreed by a commissioner).
This is due to the recognition that March is the month where a higher proportion of UDAs are achieved but also the month where COVID-19 lockdown measures were introduced.
The usual clawback rules for underperformance (96% of contract value) still apply however it is uncertain how performance will be measured in 2020/21 currently.
Should you need assistance in checking your deemed underperformance, please contact a member of the Dental Team.
Job Retention Scheme - Flexible Furloughing and important dates
On 29 May 2020, the Chancellor outlined how the government plans to reshape the Coronavirus Job Retention Scheme (CJRS) from 1 July 2020 to encourage businesses to bring those who are furloughed back to work. We have outlined the key changes below and how the scheme will evolve over the coming months in terms of what can be claimed.
From 1 July 2020, businesses will have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.
Businesses can decide the hours and shift patterns that their employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that staff can be furloughed for.
Any working hours arrangement that are agreed with an employee must cover at least one week and be confirmed to the employee in writing.
When claiming the CJRS grant for furloughed hours, businesses will report and claim for a minimum period of a week. Businesses can choose to make claims for longer periods such as one monthly or two weekly cycles if this is more appropriate.
Businesses will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. We can assist and make the claims for you.
If employees are unable to return to work, or businesses do not have work for them to do, they can remain on furlough and businesses can continue to claim the grant for their full hours under the existing rules.
Employer contributions
From August 2020, the government grant will be tapered as follows:
- For June 2020 and July 2020, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee does not work – employers will have to pay employees for the hours they work (applicable from 1 July).
- In August 2020, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions.
- From 1 September 2020, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
- For the final month of the scheme in October 2020, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
- The cap on the furlough grant will be proportional to the hours not worked.
It is important to note that the scheme will close to new entrants from 30 June 2020. From this point onwards, businesses will only be able to furlough employees that have been furloughed for a full three-week period prior to 30 June 2020.
This means that the final date that businesses can furlough an employee for the first time will be 10 June 2020 for the current three-week furlough period to be completed by 30 June 2020. Employers will have until 31 July 2020 to make any claims in respect of the period to 30 June 2020.
Also, for periods starting on or after the 1 July, the maximum number of employees you can claim for in any period cannot be higher than the maximum number you have claimed for in a previous period. For example, if your highest single claim for periods up to 30 June was for 100 people, you can’t claim for more than this number in later periods.
Please note that HMRC's online calculator can only be used for claims ending on or before 30 June. After this date, you will need to work this out. This means that for any employees who you are flexibly furloughing, you’ll need to do a series of calculations to work out what the furlough pay will be for the usual hours that your employee is not working during your claim period. Further guidance on how to calculate what you can claim can be found in the links below.
Example of how to calculate the amount you should claim for an employee who is flexibly furloughed
Parents Returning to Work after Extended Leave Eligible for Furlough
Staff members on paternity and maternity leave who return to work in the coming months will be eligible for the government’s furlough scheme, even after 10 June cut-off date (assuming the employer has previously made a claim via the CJRS).
Making changes to your claims if you have over-claimed
If you’ve made an error in a CJRS claim that means you received too much money, you must pay this back to HMRC.
HMRC have updated the application system so you can tell them if you have over-claimed in a previous claim – when you apply you’ll be asked if you need to reduce the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. You should then keep a record of this adjustment for six years.
If you have made an error in a CJRS claim and do not plan to submit further claims, HMRC are working on a process that will allow you to let them know about your error and pay back any amounts that you have over-claimed. HMRC will update guidance and keep you informed when this is available.
Dental Practices are reminded that they can only take advantage of the CJRS reimbursement in respect of the private element of the business. A calculation and adequate documentation should be available for the NHS should they enquire into these calculations at a later date. Please contact us for assistance with ensuring your claim is not ‘duplicative’.
HMRC have provided a webinar on how the scheme is changing please click here to book your place.
Annual Reconciliation Report (ARR) / Net Pensionable Earnings (NPE)
Providers and performers who are members of the NHS Pension Scheme are required to confirm their estimate of their net pensionable earnings (NPE) is correct.
All providers and performers are required to complete the Annual Reconciliation Report (ARR) for the 2019/20 year via Compass by 30 June 2020.
Should you need assistance in calculating your net pensionable earnings, please contact a member of the Dental Team.
Pension Annual Allowance
Due to the ongoing COVID-19 crisis, the government has extended the voluntary scheme pays deadline for the 2018/19 tax year by a further three months from 31 July 2020 to 31 October 2020. This deadline is also expected to be reviewed again at the end of July 2020.
Generally, an individual may invest £40,000 in their pension(s) each year and will be entitled to tax relief unless their “threshold income” (for ease think taxable income) exceeds £110,000 and their “adjusted income” (for ease think taxable income plus pension growth) exceeds £150,000 (for years 2016/17 to 2019/20). An individual’s pension annual allowance is abated by £1 for every £2 their adjusted income surpasses the £150,000 threshold. This continues until it reaches the minimum taper annual allowance of £10,000 (this is when adjusted income is equal or exceeds £210,000).
Any unused Annual Allowance from the last three tax years can also be carried forward and added to the current year’s Annual Allowance. However, it is now likely that many higher earners will have now fully utilised available unused annual allowances against previous tax years. Assuming NHS pension growth (plus any contributions to private pension schemes) remains below £40,000 and ‘threshold income’ remains below £200,000 then annual pension tax charges should be avoided.
From 6 April 2020, both the threshold income and adjusted income thresholds have been extended by £90,000 (to £200,000 and £240,000 respectively). This should remove a significant proportion of dentists from these annual tax charges. To combat penalizing the highest earners, the maximum abatement is now £36,000, meaning those with an adjusted income of over £312,000 will have a pension annual allowance of just £4,000.
Should you be faced with an annual pension tax charge then it may be possible to elect for the scheme to pay this on your behalf. We strongly advise you take independent pension advice should this be relevant to you.
For the 2019/20 tax year, NHS England have also agreed to fund the cost of scheme pay elections and as a result, this will not lead to a reduction in NHS Pension benefits for this year. NHS England will repay any reduction on retirement. The measure has been introduced with the aim of removing the disincentive to work extra hours as a result of the impact of pension tax legislation.