GPs and mind boggling

GPs and mind boggling

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I have a few queries about GP accounts and tax treatment and I should be really grateful for any guidance:

AVC contributions: how is tax relief given to GPs in their SAR? (I.e. as a deduction from profits or given as higher rate tax relief only 18 %?)

NHSPS employer and employee contributions in respect of the s-employed GP: how is tax relief given in the GP's SAR?

Added back to profits last tax year was employer accrued superannuation 14% on accrued income from QOF. Shall I assume that the employee element 6% deductible despite of the income not received until next year?

How should disallowed employer contributions on accrued superannuation income be shown in the SAR? Last tax year it was shown in the p&l as disallowed employee costs. Was that right?

james

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By User deleted
13th Sep 2006 13:49

GP superannuation
The accounts should, of course be prepared on an accruals basis so the income from QOF should include an appropriate proportion of the achievement payment.

The employer's superannuation (14%) should be shown as an expense in the accounts, on an accruals basis (so an estimate of any balancing payment may need to be computed). In fact, we tend to show this as a negative figure just below the GMS/PMS income figure. This should be added back in the tax comp.

The employee's (6%) and AVC (up to 9%) contributions should go to drawings.

Tax relief is given by claiming all three elements physically paid in each tax year in box 14.10 of the self-assessment return. The effect of this is to give relief at 40%.

An exception to the above arises where the actual payments made in the tax year were greater than the final liability shown on the Certificate of Pensionable Profit for the year. In such cases, the claim on the tax return should be restricted to the final liability, amended returns being submitted, where necessary.

The above treatment has been confirmed by HMRC who issued a represcription of ESC A9 for 2004/05 and 2005/06. (See HMRC web site.)

From 6 April 2006 the new pension rules come into effect but this will not affect the concept that tax relief will be given on a payments basis rather than an accruals basis.

Superannuation (employer's, employee's and AVCs) would have been deducted from other sources, not just the QOF, so if you did not pick it all up, last year's self-assessment and accounts will have been incorrect.

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By User deleted
14th Sep 2006 09:45

GPs revisited
Thank you for your kind reply which has confirmed my understanding except for one point:
Do you mean that the 6% employee element on QOF accrued income is not an allowable expense and it therefore goes to drawings? (I was under the impression that the 20% on accrued QOF is not regarded as the self-employed GP's s/annuation but is in respect of his employees. If that is the case, why disallow the 6%?)

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By User deleted
14th Sep 2006 15:12

QOF
I cannot see why there would be a deduction for the GPs' staff employee contributions. I am aware that in some areas the PPSA made deductions from the QOF achievement payment as a further payment towards the partners' own contributions. However, in all the cases we deal with, no superannuation deduction has been made from the QOF payment. Having said that, some practices had their balancing superannuation liabilities deducted within the same document (remittance advice) as the QOF achievement.

I would suggest that you speak to your local PCT/PPSA to find out precisely what the deduction represented.

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