Medical News Spring 2019
Welcome to our Spring 2019 Medical News
In this issue we take a look at
Tax Rates 2019/20
Making Tax Digital (MTD)
Pensions – Annual Allowance Tax Charges
Tax Rates 2019/20
A copy of our 2019/20 tax rates card is now available.Download Here
Many of the figures are fundamental to our business and personal lives. We are sure that you will find it a useful point of reference throughout the coming tax year and below we have listed just a few examples of how it can be used.
Personal tax rates
The personal allowance has increased to £12,500 from 6 April 2019. We have also summarised the income tax rates and bands which apply to all types of income.
If you buy a property in the UK the tax you pay is different depending on where you live. Stamp Duty Land Tax applies in England and Northern Ireland, Land and Buildings Transaction Tax is payable in Scotland and Land Transaction Tax in Wales. The amount and availability of First-Time Buyers Relief varies depending on where you live.
If you sell an asset such as land, capital gains may be due. Our tax rates highlight the main rates and reliefs so that you can consider the tax bill that may arise.
Rates for businesses
If you run a business, obtaining the right allowances on equipment that your business buys can affect the tax that your business has to pay each year. The Annual Investment Allowance has increased from 1 January 2019 to £1,000,000 per annum. We have summarised the main allowances that are available.
Rates for employees
There are increases in the percentage charges for company car benefits again this year. Our website explains how these are computed to help ensure that you are paying the correct amount of tax.
Travel is a daily part of business life. If you drive your own car on business, HMRC allow certain tax free mileage allowances to be paid. If you are paid less than these rates, you may be entitled to a tax refund. Our website highlights the rates.
These rates are intended for use as a quick point of reference. Should you require any further information, have a simple question or require detailed advice we are only a phone call away.
No Tax Changes Announced in Spring Statement
Despite the continuing uncertainty surrounding Brexit the Chancellor delivered his Spring Statement on 13 March. The purpose of this statement is to update the House of Commons and the country on the state of the economy; it is not intended to include any major tax announcements, and none were made by the Chancellor.
As already announced, the personal allowance and the higher rate tax threshold will increase on 6 April 2019. The personal allowance rises to £12,500 and the basic rate band to £37,500, which means that for most taxpayers the higher rate tax threshold will be £50,000.
These thresholds were due to come into effect from 6 April 2020 but the Chancellor announced that the start date would be brought forward by one year. Note that the limits will then remain the same for 2020/21.
A summary of this year’s Spring Statement is now available.Download Spring Statement
Making Tax Digital (MTD)
Making Tax Digital (MTD) has been recently introduced by HM Revenue & Customs with the intention to make the tax system more effective, efficient and easier for taxpayers.
This is a significant change to the administration of taxes and medical practices, locums and practitioners with private practice income will be impacted by the new scheme.
Businesses will need to maintain their accounting records in a digital format and submit updates to HM Revenue & Customs using MTD compliant accounting software. This is with the aim of providing ‘real time information’ to HM Revenue & Customs.
The initiative will ultimately affect all business taxes (income tax, corporation tax and VAT). Making Tax Digital (MTD) is going to be phased in gradually and commenced on 1 April 2019 with Making Tax Digital for VAT.
Following the recent Spring Statement delivered by the chancellor, he has confirmed that Making Tax Digital will not be extended to income tax and corporation tax until April 2021 at the earliest.
Making Tax Digital for VAT
VAT-registered businesses with a taxable turnover above the VAT threshold (which is currently £85,000) are now required to maintain their accounting records in a digital format and use MTD-compatible software to submit their VAT Returns for all VAT Returns that start on or after 1 April 2019.
For the majority of our medical clients, Making Tax Digital for VAT does not apply as the services provided by registered doctors and healthcare professionals where their ‘principal purpose is to protect, maintain or restore the health of the individual concerned’ are exempt from VAT. However, MTD for VAT may be relevant to practitioners with Medicolegal income over the VAT threshold or those supplying purely cosmetic and aesthetic related procedures (Botox, fillers and such like) and may need to be VAT registered.
If your business is registered for VAT, your contact at Humphrey and Co will have been in touch with you to assist you in helping your business conform to these new requirements.
Making Tax Digital for Income Tax and Corporation Tax
In the lead up to April 2021 and for those medical clients who are not required to file quarterly VAT Returns, Humphrey are Co are gearing up to support you and to ensure that your business will be digitally ready.
We shall provide further details to you as and when we receive further information from the government.
NHS Pension - Potential Annual Allowance Tax Charge
This has been a hot topic for over a year now but we have seen an increasing trend with NHS doctors breaching the annual allowances and facing a tax charge.
A brief recap...
Generally, an individual can make annual pension contributions of up to £40,000 that will qualify for tax relief. This is known as the annual allowance.
The annual allowance is tapered for those individuals with an “adjusted income” exceeding £150,000. “Adjusted income” is calculated as taxable income plus your pension input.
If your adjusted income for 2018/19 exceeded £210,000, your annual allowance is fully-tapered to just £10,000.
For the NHS Pension scheme, the “pension input” is measured as the annual growth in the pension, and not the contributions that you make from your salary.
It is possible that your pension input for 2018/19 exceeded your annual allowance. If this is the case and there is insufficient unused allowance available from previous years then an excess pension tax charge will arise and this will need to be reported on your Tax Return.
If an excess pension tax charge does arise, it is possible to opt for the NHS Pension to pay the tax charge. You must obtain advice from a suitably qualified financial adviser in this regard as Humphrey and Co is not authorised to provide pension advice or assist in such matters.
Please note that if a pension tax charge does arise then and you wish to opt for the scheme to pay, then an application to NHS Pension must be made by 31 July 2020.
To enable Humphrey & Co to review your NHS pension position for 2018/19, you will need to obtain your NHS Pension Annual Allowance Pension Savings Statements for 2018/19 (for both the 1995/2008 scheme and 2015 scheme). NHS Pension Services will automatically provide members with Pension Saving Statements by the 6 October following the end of the year. e.g. 6 October 2019 for 2018/19.
If you do not receive these by this date, you should request Pension Savings Statements from NHS Pension Services by:
- calling 0300 330 1346; or
- emailing email@example.com
You will need to quote either your National Insurance or Pension Membership (SD) Number.
It is important that the Pension Savings Statements are forwarded to Humphrey & Co upon receipt to ensure that we are able to review your tax position accordingly and advise whether any tax charge applies.