Doctor's pension contributions

Doctor's pension contributions

Didn't find your answer?

Simple question really - when is a pension contribution paid?

HOWEVER for self -employed medical practitioners not totally straightforward!

I know that tax relief is given when pension contribution is actually paid i.e. when it is shown as a deduction from the monthly global sum/PMS contract value by the PCT. This will initially be based upon an estimated level of profit for the doctor at the appropriate rate for that level of income. Once the annual certificate is completed when the actual level of superannuable income is known then there will either be an over/underpayment. Any overpayment is required under HMRC rules to be adjusted in the year it relates to (not the year in which the refund is given) BUT any underpayment is to be accounted for on the self assessment return in the year that it is paid. If the pension certificate is sent in after completion of accounts and tax return then it does sometimes happen that the PCT do not process the forms very quickly and so may not collect (by deduction from a months Global Sum) before 5 April. Once my client knows that there is an underpayment they introduce funds into the practice to cover the shortfall in practice monies that they know will happen in due course.

SO

Is the date of payment:-

a) When the Doctors pay into the practice (awaiting the practice to have it deducted by the PCT) OR

b) When the PCT finally decide to actually so deduct it (which could be in Mid April, Mid May the following year) OR

c) When the PCT pay it over to NHS pensions agency (i.e. Would an April deduction would be paid over by the PCT in May!)

I know it is only a question of timing to obtain the tax relief but I want to ensure the claim is correct. The client I am referring to has a March year end, always files just before end of January and always completes the pension certificates in February BUT the PCT never process anyone's calculations until after 28 February in any event so a different year end would not make any difference!

Your thoughts would be welcome please.

SJ

PS- To reiterate I am specifically talking about self employed Doctors.

PPS-  When does the contribution get included in the figures for the pension input amount/period?

PPPS - Neither ICAEW tax faculty nor Healthcare group can/will give advice on this (apparently!)

Replies (2)

Please login or register to join the discussion.

avatar
By John R
04th Jan 2014 18:02

b

The date of payment for tax relief purposes is, in my opinion, the date of the deduction from the global sum payment i.e. the date the net amount of global sum is received by the practice. The PCT (or their successor) acts as agents for NHS Pensions so it is my understanding that it is irrelevant when they make the payment over to NHS Pensions.

Also, I consider that as the doctor is a partner in the practice, he is effectively making a payment (by deduction) at the point at which the practice receives the net sum and not when he pays the money to the practice account. Technically, I think there could be an issue if the partner had an overdrawn capital account at the date of the deduction as the contribution would not be paid from the partner's own funds.

The date of payment of NHS GP pension contributions has no relevance to Pension Input as this is calculated on the basis of growth in the fund rather than the payments made.

We advise our clients to send a personal cheque if they want to claim tax relief in the current year as the PCT/successor cannot be relied upon to deal with the deduction by 5 April. This procedure is in fact recommended in the guidance issued by NHS Pensions.

See HMRC Manual RPSM05300050 et seq for more guidance on the timing of payments.

Thanks (1)
Replying to ireallyshouldknowthisbut:
avatar
By SWJWBA
06th Jan 2014 11:05

Hi John R

Many thanks for your comments. Allowing it this way (i.e. upon PCT deduction) is certainly the way it has always been done and indeed it has always been completed by the PCT prior to 5 April in all previous years. There was therefore no way of knowing they would not do so again this year so client will have to accept the delay in obtaining tax relief.

SJ 

Thanks (0)