Budget comment - the Medical sector

14th March 2017 by Jan McLean

Mr Hammond’s light hearted delivery of his first and last Spring Budget Statement was at initial glance low on content although will be followed up by his inaugural Autumn Statement later this year, as long as he stays in office and avoids repeating the fate of Chancellor Lamont, the first exponent of attempting to banish the annual March speech to history, only to be sacked within weeks of making the same promise!

As ever, as much is said by what is omitted and it is clear there is to be no U-turn on the reduction in the Lifetime Allowance limit for pensions and indeed clarification regarding reducing the annual pension investment allowance.  Tax pitfalls are increasing for the uninformed and it is important for those affected to take action before the 5 April 2017 to apply for Individual Protection 2014 where the value of pension assets breach £1,250,000.

As is par for the course it seems amongst Chancellors, some statements made will not take effect in the next tax year and one important example of this tactic was made regarding the notional tax free dividend allowance which initially commenced at £5,000 per year from 6 April 2016 and which is to be reduced to £2,000 per year from April 2018.  Those in the medical profession enticed by the strategy of channelling income through Limited Company structures will see the effectiveness of this exercise quickly reduced.

Additionally, from 5 April 2017 there are other potentially significant tax changes to those medical professionals channelling income via their private Limited Companies. Public Sector organisations and those organisations supplying workers to the public sector, including the NHS, will be responsible for considering whether the contractor is effectively an “employee” and therefore that organisation will be liable to deduct PAYE, National Insurance and possibly pension contributions at source. It may be that some of the current locum contracts run through personal Limited Companies will therefore no longer be allowable. It is worth noting that GP Partnerships, for the purpose of this legislation, will be considered Public Service bodies and therefore they will have the responsibility to determine whether their locum doctors are essentially employees, even if these individuals are currently “self employed” or working via their own Limited Companies.

So in summary, a light touch budget delivered light-heartedly as the nights become lighter.  Will storm clouds build up before we reach the Autumn?  “The Budget 2017 Part II” may be a heavier read than the original.


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Jan McLean

Jan McLean

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