GP's Superannuation balancing payment 2004/05

GP's Superannuation balancing payment 2004/05

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GP's income for the year ended 31/3/05 has increased by approx 20% as compared to previous years.

As a result the employer's and employee's superannuation deductions (by this I refer to the partners and not employees of the surgery) made by the local health boards (LHB) are insufficient as they were based on previous years income.
Thereby a balancing payment will be due for 2004/05 payable we assume by 28/2/06 (date of submission of GP superannuable income declaration forms)

The amount due cannot be ascertained until the accounts for the year end are finalized.

Can this balancing payment re employer's and employee's superannuation be allowed for tax purposes on the accruals basis and not in the year of payment?

The amounts of underpayment could be in the region of £6500 per partner.

If the tax relief is given in the year of payment, how does a retiring GP obtain tax relief on the balancing payment made in the year after retirement ?

Comments very much appreciated

IJ
Ian Jones

Replies (3)

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By roger morgan
20th Sep 2005 14:58

GP Superannuation mess
Ian - you have identified one of the issues that have yet to be resolved relating to the new GP superannuation scheme. Sadly it is not the only problem, and the 'Annual Certificate' also has a number of problem areas which means that the NHSPA are meant to be issuing revised guidance and a revised certificate shortly - well thats what they said at the beginning of August and its not arrived yet!

From talking to the Inland Revenue technical division we understand that these issues are being looked at but that for the moment anyway the Inland Revenue are sticking to the strict line for tax relief. So for the time being we are accruing for the additional liability through the partnership accounts (because we need to get the individual capital accounts as accurate as possible) but are following the Inland Revenue strict line of only claiming tax relief for contributions actually paid. At least this way we can complete 04/05 tax returns and we are advising clients of their 'worst case' tax liability payment due on 31 January 2006.

As you rightly say the the 'annual certificates' are meant to be submitted by the 28 February 2006 so that any underpayments can be collected by the PCT's in March 2006. It will be interesting to see if these deadlines can be adhered to given the incredible slowness of getting the revised forms/guidance issued.

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By AnonymousUser
22nd Sep 2005 09:43

Dear Roger
Thanks for your comments and may I take it one step further in that if the superanuation payments are allowed only in the tax year of payment , how will a retiring GP on say 31/3/06 get tax relief on his or her balancing payment made in the 2006/07 tax year.
As you can see, this is causing a real problem.

I eagerly await your reply


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By roger morgan
23rd Sep 2005 09:18

GP Superannuation 2004/05
Ian - I don't have an answer for you at this stage and nor do the Inland Revenue. The easiest, neatest, and tidiest solution would be for the Inland Revenue to allow the deduction through the practice accounts but the strict line being taken at the moment does not permit this. The problem is exagerated by the need to claim the deduction for the employers 14% contribution shortfall as well.

We are chasing the NHSPA and the IR technical division on a weekly basis for resolution to these issues but are not getting anywhere at the moment.

Sorry I can't help more at the moment.

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