Budget comment – the Medical sector

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.

Author

Jan McLean

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