GP and practice manager partners whose surgery prepares accounts for a period that does not coincide with the standard tax year will have additional paperwork to file to ensure their NHS pension benefits are accurate, the Government has confirmed.
New NHS pension rules take effect from 1 April this year following a consultation that ended last month, and which will have an impact on partners in around 30% of practices in England and Wales.
They require affected GP and other clinical and non-clinical partners to provide their usual certificate of pensionable earnings (which are used to calculate their pension benefits) plus a revised certificate later down the line.
The changes are necessary because of tax reforms introduced in April 2024, that move the time period that a businesses’ taxable profits are calculated to align with the standard tax year (April to March), rather than their own accounting year-end, which can be whatever date they choose.
This shift has a knock on effect on the tax affairs of GP, practice managers or other partners, whose surgery does not wish to align their accounting period with the UK tax period.
It means they will need to apportion profits or losses of the next or previous accounting periods to determine the tax year profits, and could involve having to use a provisional figure in their self-assessment tax return, which is in turn used for the annual certificate pensionable profits.
Partners who use provisional figures will now have to complete a revised annual certificate when the final figures are known to ensure pension contributions and earnings are correct, under the changes which were supported by the BMA.
The updated certificate must be completed ‘within one month of the deadline for the member to notify HMRC of the correct figure on their amended tax return,’ the Government paper outlining the outcome to the consultation said.
Meanwhile, a raft of other updates to NHS pension rules, which take effect from 1 April, have also been confirmed. Key changes include:
- Part-time staff whose overtime hours during the period between 1 April 2015 and 31 March 2024 didn’t count towards their NHS pension will have the choice of retrospectively being able to convert them into ‘pensionable hours’ by paying additional contributions. This change affects individuals in the 2015 NHS Pension Scheme and will rectify an inconsistency in scheme rules. Under the changes, welcomed by the BMA and Royal College of Nursing, practices and employers will have to notify affected pension members of their options by 1 January 2026. Individuals will then have three months after being notified to make their choice. Only additional hours up to a ceiling of contracted whole time equivalent hours will be eligible to be converted. The Government paper has also said members should be allowed to make the contributions ‘over a period of time’ and that employers ‘will also be able to agree payment plans’.
- Contribution rates for those on reduced pay due to certain authorised absences (such as maternity, paternity, parental, adoption, carers’ or sickness leave) will be based on actual pay rather than their previous full pay. This change will be backdated to 1 October 2022, which means some employees could receive a refund. And despite paying fewer contributions, the level of pension benefit will remain the same, the Government has said. The BMA said there needed to be clear communication about this change to members so that those due a refund ‘understand why they are receiving a refund’.
- Allowing members who are affected by the McCloud remedy to revoke a decision at retirement about the pension benefits they take (known as the ‘deferred choice’) up until 2 weeks before the date the first benefits become payable. A deferred choice election can also now lapse where a member dies more than 2 weeks before the day on which their first benefit payment is due.
- Allowing members on neonatal care leave to continue building up pension benefits.
