Medical News
Autumn 2023

Welcome to our Autumn 2023 Medical News

In this issue

Autumn Statement 2023

Voluntary National Insurance Contributions deadline extension

NHS Pension Scheme changes and implementation of McCloud remedy

Cosmetic and Aesthetic treatments – VAT Considerations

Staff entertaining & trivial benefits

Christmas opening hours

Autumn Statement summary

With the Autumn Statement just recently announced by Chancellor Jeremy Hunt, we have put together a summary to highlight the key points that may affect you and your business.

In his statement to Parliament, the Chancellor set out a plan to cut National Insurance paid by employees, while also unveiling the government’s tax and spending plans for the economy.

Our summary will cover the following areas:

  • Cutting tax and rewarding hard work
  • Backing British Business
  • Income tax
  • VAT
  • Pension reform
  • Corporate taxes
  • Employment taxes

We have also included a useful Q&A section to communicate some of the key issues that may impact you, along with an infographic showing how you can reduce your 2023/24 tax bill.

Autumn Statement Summary

Voluntary National Insurance Contributions deadline extension

To qualify for a full state pension at retirement a person must have 35 qualifying years of NI contributions.

Due to a surge in demand for the top-up of National Insurance contributions, the government has announced a revised deadline of 5 April 2025 to make voluntary contributions to plug any gaps in National Contributions dating back to April 2006. Individuals with gaps in their National Insurance records now have further time to assess their National Insurance position.

You can check your National Insurance (NI) record online Check your National Insurance record - GOV.UK (www.gov.uk) to see:

  • what you’ve paid, up to the start of the current tax year (6 April 2023)
  • any National Insurance credits you’ve received
  • if gaps in contributions or credits mean some years do not count towards your State Pension (they are not ‘qualifying years’)
  • if you can pay voluntary contributions to fill any gaps and how much this will cost

After the 5 April 2025 it will then revert back to the normal timeframe where you will only be able to pay for voluntary contributions for the past 6 tax years.

NHS Pension Scheme changes and implementation of McCloud remedy

Following the McCloud case which the Court of Appeal ruled that the firefighter’s public sector pension was age discriminatory, pension changes are now being implemented to the majority of public sector pensions to ensure that all active pension members are treated equally. This includes the NHS Pension scheme.

Aspects of the 2015 NHS Pension scheme were perceived as less attractive, such as a retirement date for younger members of up to eight years later than those older members within the 1995/2008 NHS Pension scheme who were also entitled to remain in the 1995/2008 Pension scheme for longer.

This process will affect members who were in the 1995/2008 NHS Pension Scheme before 31 March 2012 and had continuous pensionable public service until they were transferred into the 2015 Pension scheme on or after 1 April 2015.

How will the changes be implemented?

NHS Pensions have implemented the changes to remedy matters in two stages.

In 2022, all active members (regardless of age) were moved onto the 2015 NHS Pension Scheme and the legacy 1995/2008 NHS Pension Scheme was closed. Members of the legacy 1995/2008 NHS Pension Scheme could retain any service earned before 1 April 2022 and access pension benefits in the same way. From April 2022, members then accrued pension benefits under the 2015 scheme.

The second step was to alleviate discrimination that may have taken place during the “remedy” period (between 1 April 2015 and 31 March 2022). Affected members will receive accrued pension benefits that they were entitled to and potentially lost out on when previously placed into the 2015 scheme. On 1 October 2023, NHS Pensions commenced implementing a “rollback”, whereby any continuous service which affected members had in the 2015 Pension Scheme between 1 April 2015 and 31 March 2022 was transferred or “rolled back” into the 1995/2008 pension scheme.

Roll back is automatic until members have decided whether to opt for either scheme benefits, which NHS aim to offer a choice on retirement from April 2024 onwards. For those members retiring before April 2024, NHS will contact these individuals and ask to make choices at a later stage.

The rollback procedures may cause potential pension annual allowance issues, in particular for those who may have been liable to an annual allowance charge during the remedy period (between 2015/16 and 2021/22 tax years).

How will affected members be informed?

Members affected by rollback will receive a “remediable service pension savings statement” for the tax years during the remedy period. This is essentially an annual allowance statement showing the recalculated pension input for the period 2015/16 through to 2021/22 years and pension input amounts for the 3 tax years before i.e. 2012/13, 2013/14 and 2014/15.  

Affected members will receive the remediable service pension savings statement by 6 October 2024 and will then receive their 2022/23 annual allowance statement. NHS Pensions are hoping to be sending the majority of these statements from April 2024 onwards.

How will affected members report potential pension annual allowance issues following rollback?

Affected members will not need to report any annual allowance charge for 2022/23 on their 2022/23 Self Assessment Tax Return (which will instead be dealt with via HMRC’s Digital Service (see below))

HMRC have also confirmed that members affected by rollback will not be required to resubmit Self-Assessment Tax Returns for any tax year during the remedy period (tax years 2015/16 to 2021/22) or for those that are eligible to an annual allowance charge for 2022/23 tax year.

Instead, affected members and agents can report and correct their pension annual allowance position by using a newly launched HMRC digital service.  

The online service enables members to:-

  • Reassess any previous annual allowance charges during the remedy period tax years
  • Make an application for a refund of any previously overpaid annual allowance charges for the 2019/20, 2020/21 and 2021/22 tax years
  • Make an application to claim compensation for any previously overpaid annual allowance charges for 2015/16 to 2018/19 tax years

After the HMRC online service has been used to report any pension changes, HM Revenue & Customs will review the information. If there are additional tax charges to pay, HM Revenue & Customs will issue a notice by post. In the event that that a member has previously paid a tax charge and the recalculation leads to a position where tax is repayable, HM Revenue & Customs will issue a tax refund directly using the bank details held on record.

In instances, whereby members have previously elected for “Scheme Pays” and tax charges have been settled by the NHS Pension scheme, HM Revenue & Customs will liaise with NHS Pensions to determine whether the pension scheme will need to repay overpaid tax charges paid between 6 April 2015 to 5 April 2019 and if applicable, increase pension benefits to cover the amount of repayment due for overpaid tax charges previously paid on the member’s behalf.

How will members unaffected by rollback report their annual allowance charge for 2022/23?

Members not affected by rollback will receive their annual allowance statement for 2022/23 by 6 October 2023 and will need to continue to report any annual allowance charge for 2022/23 on their 2022/23 Self Assessment Tax Return.

Scheme pays deadlines

For individuals who have a pension tax charge, the liability can be met by the mandatory scheme pays facility.

The Mandatory scheme pays deadlines for members who are affected have subsequently changed and scheme pays elections will need to be made by 6 July 2025 (active and deferred members) or 6 July 2027 (pensioner members).

The extended deadlines shall also apply to annual allowance charges arising in the 2019/20, 2020/21 and 2021/22 tax years.

For members not affected by roll back, the normal deadline of 31 July 2024 shall apply.

We are here to help!

We do appreciate that the above is a complex area and the information is ever evolving.  Due to the significant pressure on NHS Pensions to process and implement systems, it is likely to take a considerable amount of time for all members to be issued with pension statements.

We request that clients forward their pension statements to their contact at Humphrey & Co. We will then be able to advise you accordingly as to how to report any changes.

In the meantime, we do encourage our clients to consider whether they are affected by the remedy by accessing the following HMRC online tool below:-

Check if you are affected by the public service pensions remedy - GOV.UK (www.gov.uk)

We strongly advise you take independent pension advice should the above be relevant to you.

Cosmetic and Aesthetic treatments - VAT considerations

For the majority of our doctors and consultants, VAT is not a consideration as supplies of healthcare by health professionals are generally exempt from VAT.

In order for the service to be exempt from VAT, there are two conditions that must both be met

These are:-

  • Services must be within the profession in which the person is registered to practise and;
  • Where the primary purpose of the service is to protect, maintain or restore the health of the person concerned.

The criteria should be applied to each treatment to determine whether the medical exemption is relevant.

Other services provided by practitioners such as preparing and issuing medical reports and certificates, speaker fees and product sales must be assessed on their primary purpose.

If the primary purpose is to provide a third party with a necessary element for taking a decision, it could be considered taxable. Services will include the writing of articles and services directly supervised by a pharmacist.

However, in some instances, cosmetic and aesthetic treatments may not meet the two conditions for VAT exemption. Where treatments are undertaken for cosmetic motives and not as part of a healthcare treatment programme, these treatments are considered to be a VATable supply.

If considered a VATable supply, doctors or performers should be maintaining accounting records to monitor VATable turnover levels and consider whether there is a requirement to register for VAT. VATable turnover should be monitored on a 12 month rolling basis. Currently, the VAT threshold at which a person is required to register for VAT is £85,000.

Due to the ever-growing cosmetic treatment sector, HM Revenue & Customs have recently formed a specialist compliance team to target their attention on practices and businesses undertaking cosmetic and aesthetic procedures. Treatments such as Botox and dermal fillers are being scrutinised by HMRC as to whether these medical procedures are not to restore a patient’s health but are wholly for cosmetic reasons. 

As treatments are undertaken on an individual case basis, doctors and consultants should keep patient notes to provide to HMRC, in event of an inquiry.

Please contact us should you wish to discuss the VAT treatment of services provided.

Staff entertaining & trivial benefits

With the Christmas season suddenly on the horizon, medical practices will be looking at ways to thank their staff for their contributions and hard work during the year. Whatever your plans are, you do need to be aware of the tax implications of entertaining and making such gifts.

STAFF ENTERTAINMENT

As an employer providing social functions and parties for your employees, you have certain National Insurance and reporting obligations.

What you need to report and pay depends on:

  • if it’s an annual event
  • if it’s open to all of your employees
  • if it costs more than £150 per head
  • how many events you provide during the tax year
  • whether the employee is a director, and how much they earn

You might not have to report anything to HM Revenue and Customs (HMRC) or pay tax and National Insurance. To be exempt, the party or similar social function must be all the following:

  • £150 or less per head per year
  • annual, such as a Christmas party or summer barbecue
  • open to all your employees

TRIVIAL BENEFITS

You do not have to report a benefit for your employee if all of the following apply:

  • it costs you £50 or less to provide (per employee)
  • it is not cash or a voucher that can be exchanged for cash
  • it is not a reward for their work or performance
  • it is not in the terms of their contract

This is known as a ‘trivial benefit’. You do not need to pay tax or National Insurance or let HMRC know.

The employee will have to pay tax on any benefits that do not meet all of the above criteria.

If a business provides a bottle of wine in a nice gift bag as a Christmas gift, for example, the value of the gift bag should be included in the value of the gift when deciding whether the total value exceeds the trivial benefits limit.

STAFF CHRISTMAS BONUSES

Staff bonuses issued must be reported through payroll as these are subject to Income Tax and National Insurance.

Bonuses paid to staff must be included in payroll as additional earnings. If you do have plans to pay a bonus, you will need to speak to your payroll provider in advance of the payment to ensure that this is reported to HMRC at the time of payment.

As always, do feel free to contact us if should you require advice.

Christmas opening hours

The office will be closed from 5pm on Friday, 22 December 2023

Our Opening Times during the Christmas Period will be:-

Monday25 DecemberClosed
Tuesday26 DecemberClosed
Wednesday27 DecemberClosed
Thursday28 DecemberClosed
Friday29 DecemberClosed
Monday1 JanuaryClosed
Tuesday2 JanuaryOpen

On behalf of everyone at Humphrey & Co we would like to wish you a very Merry Christmas and a happy, healthy and prosperous 2024.