Medical News Autumn 2017
Welcome to our Autumn 2017 Medical News
In this issue we take a look at
The problems facing high earners and their pension contributions
Free childcare for the self employed
Bereavement Support Payments
Changes to self-assessment payment methods
Pension Contributions for High Earners
Are you earning over £150,000 and have paid (or are still paying) into the NHS pension scheme?
This is a reminder for our higher earning Doctors, GPs and Consultants. Please be aware that the tax relief to which you are entitled, on any pension contributions, will be restricted in 2016/17 and future years.
Generally an individual may invest £40,000 in their pension(s) each year and will be entitled to tax relief unless their “adjusted income” (for ease of reference think taxable income) exceeds £150,000. For every £2 their income goes over the £150,000 their allowance drops by £1. This continues until it reaches the minimum taper annual allowance of £10,000 (this is when adjusted income is equal or exceeds £210,000).
For those Doctors, GPs and Consultants who have been members of the NHS Pension Scheme, care needs to be taken that the growth in the NHS pension is taken into account when calculating the annual investment into their pensions each year. For those older Doctors, GPs and Consultants with large pension pots, this means that you may exceed the limit, even if you don’t invest any further funds into any of your pension investments in a tax year!
How do you know if the growth in your pension savings has exceeded the available Annual Allowance?
The NHS Pension Scheme will automatically provide members with a Pension Saving Statement to any members who exceed the general limit of £40,000 by the 6 October following the end of the tax year; e.g. 6 October 2017 for 2016/17.
For members whose adjusted income is over £150,000 and have substantial NHS Pension savings, we would suggest that they request a Pension Savings Statement as a matter of course, as their general limit of £40,000 may be reduced to £10,000. NHSBSA will not automatically send out a Pension Savings Statement to them.
How do you request a Pension Savings Statement?
There are two ways of obtaining an Annual Allowance Pension Savings Statement for 2016/17 from NHS Pension Services:-
- Telephone them on 0300 330 1346 (this needs to be the person requesting the statement) or;
- Email to firstname.lastname@example.org and request a statement.
You will need to quote either your National Insurance or Pension Membership (SD) Number.
What happens if you exceed the Annual Allowance?
This will need to be declared on your Self-Assessment Tax Return. You will have to pay an annual allowance charge.
Any annual allowance charge which relates to the general limit of £40,000 being restricted to a minimum of £10,000 must be paid from your own funds.
For any other proportion of an annual allowance charge payable there are two options:-
- Pay the charge out of your own funds
- Ask NHS pensions to pay some or all of your Annual Allowance charge (Scheme Pays facility) if the liability is more than £2,000
To apply for Scheme Pays an election notice form needs to be completed and received by NHSBSA on or before 31 July, following the January in which the Annual Allowance charge must be declared on your tax return. For example:
Deadline for Scheme Pays
31 July 2018
31 July 2019
Please be aware that any Scheme Pays payments will affect your NHS pension pot.
If you are in any doubt whether this may affect you we would urge you to speak with your IFA (Independent Financial Adviser).
Tax-Free Child Care for the Self-Employed
Tax-Free childcare and 30 hours free childcare are two separate government schemes which will for the first time benefit parents who are self-employed.
Previously, the childcare voucher scheme was only available and entirely targeted at employees to pay for childcare out of their pre-tax and National Insurance income.
The new schemes are available to eligible parents who are either employed or are self-employed.
Parents are now able to open a new childcare account whereby the Government will contribute 20p of every £1 of your childcare costs, up to £2,000 a year per child (£4,000 if disabled). The money can be used to pay providers registered with education regulator, Ofsted.
For more details and how to claim follow: Help paying for childcare: Tax-Free Childcare - GOV.UK
30 hours free childcare
This new scheme offers 30 hours free for three and four-year-olds in England. Three and four-year-old children of most working parents will be eligible for 30 free hours of childcare a week during school terms (38 weeks).
To qualify for either scheme, parents must be:-
- Both working (either employed or on a self-employed basis)
- and each earning at least £120 a week (on average) and
- not earning more than £100,000 each a year.
Parents can use Tax-Free Childcare alongside the 15 and 30 hours free childcare schemes.
Parents are unable to use Tax-Free childcare at the same time as they receive childcare vouchers, universal credit or tax credits. However 30 hours free childcare can be received alongside these schemes.
For more details and how to claim follow: Help paying for childcare: 15 and 30 hours free childcare for 3 and 4-year-olds - GOV.UK
Bereavement Support Payments
We draw your attention to changes made to the benefits payable to the remaining spouse if their husband, wife or civil partner died on or after 6 April 2017.
You must have been under State Pension age, and your deceased spouse must have paid National Insurance contributions for at least 25 weeks in any single tax year during their working life and at the time of death be living in the UK (or a country that pays bereavement benefits).
The maximum support payments available are a lump sum payment followed by 18 monthly payments.
I have children under 20 in full time education
I don’t have children under 20 in full time education
The Bereavement Support Payments are tax free.
To be eligible for the maximum support payments a claim needs to be made within 3 months of the spouse’s death. (A claim can be made up to 21 months after the death but the support payments will be lower).
The payments are not paid automatically so if you are aware of anybody who may be able to claim, please do pass this information on to them.
For more details and how to claim follow: Bereavement Support Payment: How to claim - GOV.UK
Please be aware that from 13 January 2018, it will no longer be possible to settle a self-assessment tax bill using a personal credit card.
This is as a response to a government ban on credit and debit surcharges and is a reaction to EU directives which ban surcharges on Visa and MasterCard payments.
Self-assessment tax liabilities can continue to be settled via a business credit card, bank transfer or debit card.
Free Tax App
Humphrey & Co is one of the very first accountancy firms in East Sussex to launch a free mobile Tax App.
The great news is that this App can be downloaded onto your iPhone, iPad or Android devices. It’s packed full of really useful Tax Tables, Calculators and cloud accounting software, all of which you will be able to access, anywhere if you have an internet connection on your device.
For more details about the benefits of our new Tax App and the link to download it for free click here.