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mhm. And lastly, uh, it's a pleasure to have Lisa Pennington with us. Who is the director of healthcare services? MHA More and Smalley. They're an independent member of Baker Tilly, and they provide audit, tax, consulting and advisory services on what she's going to share with us is insight into tax and pensions, something that at the minute probably doesn't feel as relevant to you as it will when you get later on in your career. But an insight into it now it can massively help your financial situation going forwards and do everything we can do to help reduce the risk of burnout. Lisa. Thank you. Thank you. Okay. Thank you, David, for that introduction. Um, it's good to see so many of you here. I'm quite impressed that you've all stayed because I'm sure that tax and pensions isn't really high on your list of priorities at the moment. Um, we've just been listening to obviously some very good talks there, and you're all obviously working very, very hard. So the reason why it's very important to discuss tax and pensions is because, um, you'll be noticing on your pay slips that you're having pensioned deducted potentially at 13.5% or 12.5% and then tax as well, and you'd probably be hitting the 40% tax rates. So obviously, it's not the motivator, as we found out with Maslow's needs, but it is important that you're actually being remunerated and actually mitigating any tax, um, and making it better for yourselves. So just the disclaimer, the normal disclaimer. Anything that I say here, you act upon it. It's not my fault. So just the normal disclaimer there. Who are we? More? And Smalley? Um, we are health care specialist accountants. I'm Lisa Pennington. I'm the director of the healthcare team. We're Northwest based, and we deal predominantly within my department. We deal with health care, so we deal with GPS consultants, care homes, dentists. Etcetera were also part of asthma, which is the Association of Independent Specialist Medical Accountants. We represent over 50% of the G P practices within the UK and so we have a vast amount of knowledge special is, um to help you guys. Obviously in your careers today, I'm going to be talking about how the tax regime affects you, how to mitigate tax issues with pensions and tax charges and also M T D. Which stands for making tax digital, which you might have heard on the TV on some adverts. So basic principles of self assessment. Um, so at the moment, the majority are going to be employed, but in certain circumstances, you do have to submit a tax return. So the criteria there is that if you are self employed, uh, so if you were earning as long as well as your employment earnings, you're self employed. You received 2.5 1000 or more of untaxed income. Your savings investment income is 10,000 more. That'd be good, wouldn't it? If you have that also, if you have to declare capital gains. So if you've sold some shares or if you've sold another residential property, you have to declare that as well. Your company director urine comes over 50,000 and you're in receipt of child benefit or your partner is, And that child doesn't even have to be your child. Um, you had income abroad or your incomes over 100,000, so that's the criteria for actually having, too. To complete a tax return, you have to register if you need to complete a tax return by the fifth of October, following the tax year and tax returns are due and the tax returns are do the following January. So if you've had to register for 22 23 your tax return will be due in January 24 any tax will be due in, uh, then now also. Then, once you're in the self assessment, um, if your liabilities over 1000 lbs, you then have to make payments on a count towards the following tax year, and they will be due in the January and the July. So at the same time you're paying for that 22 23 tax liability, you'll then be making a payment for 23 24 rates. There's been a few changes in the budget, but at the moment for 22 23 this is the, uh, the rates the tax bands. So everyone is entitled to a personal allowance of 12,570 so that's tax free. Uh, from there, up to 50,270 would be taxed at 20% and then there's a higher rate up to 100 and 50,000 at 40% and anything over that is taxed at uh 45% now. There's a bit of an issue if you are turning over 100,000. So if you earn anything over 100,000 for every 2 lbs that you earn over 100,000, you lose a pound of your personal allowance. So you're effectively taxed at that rate of 60%. So between 100 and 100 and 25,000, 140 you've actually gone into a 60% tax rate there. Going forward next year, you've probably all seen the budget. It's now bringing down the 45% tax rate at 100 and 25,140. So you go straight into that after this 60% tax band. So we always try and keep our clients if they're in that area. We look at ways of mitigating the tax quite a lot, and I know you all see that in your pay slips that you're having a lot of tax deducted, potentially tax allowances. You do have tax free allowances, so savings interest. So if you're a basic rate, taxpayers you have 1000 lbs of savings interest before you have to pay tax on it. If you're a higher rate, you have 500 lbs dividends. If you own shares in a company, um, you'll be receiving share dividends. So at the moment, if you earn 2000 lbs, that's that's completely free. Going forward from April 23 that's been reduced down to 1000 and then going forward after that, it's going to go down to 500 lbs. Um, you also, if you have some self employment to say you're earning at the moment, you're doing something like reports for something, and you earn 1000 lbs or more. Um, you do. You can offset a trading allowance of 1000 lb against that. So any self employment you can't be bothered with claiming expenses. You can just claim 1000 lbs, and that will be deducted off there if any of you own any properties that you rent out as well again, if you don't want to actually do it on the expenses, you can just have 1000 lb property allowance, so that can just be deducted off there with No, but you can't claim other expenses so it would be restricted to that 1000 lbs various business structures. So majority of you will be employed. Uh, some of you might have some self employment as well. Some might be in partnerships, and some might have a company that's running alongside. So I'm just gonna briefly look at the different structures and how they will affect you employment as the same majority of you probably employed at the moment. You have your tax and your pensions deducted at source. And as I said, you'll be looking at your pay slips and thinking, Gosh, you know, I'm earning X amount. I'm having potentially 12.5% 30.5% pensioned deduction deducted. And I'm also hitting the 40% tax rate as well. Holiday pay your all. Entitled to that you're entitled sick pay. You have a limited expenses that you can claim tax relief on, and you obviously you have a limited say in how the business is run, so that's kind of really assessment of what employment is. Expenses were always getting asked. What can I claim as an employee? So the rules are that you have to be holy exclusive and necessarily, um, to claim expenses against employ employment. So I've just given you some examples below of expenses that you can claim. So professional subscriptions that aren't paid by the employer. I've just given you a few examples there, and there is a list on HMRC is website of any professional bodies that you can claim subscriptions against so you can get that put into your code into your tax code, and you can get tax relief at source for that motor expenses. Um, if you're not reimbursed by the employer and you're going out to sea Patient's etcetera, you can have the 1st 10,000 at 45 p and then anything after that at 25 p. And you can get that again claimed by H M. I C. By making a form this p 87 form equipment, you may be that you have to buy a stethoscope bag, etcetera that you have to use against fruit for in your employment. And as long as it's necessary, then you can also claim tax relief from that courses. Um, course is is is quite a gray area, so I've given you the link there to the HMRC website will just explain which courses are you're allowed to claim against. Anything that's actually leading to a separate kind of qualification is not normally allowable. As I put at the bottom. There use the P 87 form to claim and a thing as long as it's under 2.5 1000. Anything above that, you'd have to submit a tax return to get that claim. And accountants would be very happy if you did that, because it's, uh, something that we get asked quite a lot. But you can do that, and you can go back four years as well. Self employment. So at some point in your career, you might decide that you want to earn outside employment. So you might want to have a, uh, do something else as well, Obviously alongside your career. Um, this is really the criteria for looking at self employment. So you're actually running the business yourself. You're responsible whether or not it's successful or or not. You decide when you do your work, you can hire other people to do your work. Um, you provide equipment you charge and agreed Fixed price, and you you're actually doing it with a purpose of making a profit, and you can obviously be employed and self employed at the same time. So in these circumstances you would have to register with HMRC. Quite a few more expenses that you're claiming you're self employed as you saw the other slide Quite limited really, when you're an employee, But when you're self employed, you've got all these extra things. Um, just some examples there, Um, you've got things like locum costs if you had a locum covering you spouse's salary as long as it at market value. Um, of course, is probably you're self employed here. When you're claiming this is C. P. D. You're more likely to be able to get tax relief on that. Sorry and things like post and stationary et cetera. So quite a lot. Lot more really, if you're self employed, individual HMRC allows you to claim flat rate expenses if you're self employed, so you don't want to go to the bother of actually adding up all your expenses, keeping all your receipts. If you want to disclaim the mileage rates for your car and working from home, there are flat rates available, but other expenses you have to have all the receipts and make sure you keep those in the in the case. HMRC. You want to have a look at those limited company is another structure. I don't know how many of you potentially have got any limited companies alongside or thinking. Perhaps in the future, when you start working, maybe earning private fees, putting them through a limited company. It is a completely distinct structure. It is a legal entity on its own. You are shareholders in that company. That is not you. That is the limited company. There are pros and cons of a limited company and a slide a couple of slides later. I've shown the difference in tax. Um well, what you actually retain? Um, if you're running through a limited company or self employment, there are possible tax reductions. It's getting less the difference between self employment, the tax and self employment and limited companies. Because tax rates are going up, you have again you have seen in the budget, Um, that there are changes afoot. So also, there is also a Ms additional admin, uh, legal fees. Accounting fees will be much more expensive for a limited company you have to submit company accounts to companies house once a year. You have to submit a tax return corporation tax return, and there's a lot more regulation around it because the whole point of a limited companies that you're limited in the liability so you're limited to the amount you've paid for the shares. So obviously there has to be more transparency with a limited company. As I said, it's a separate legal entity. You have to have a separate bank account in the company name. You will receive dividends as remuneration, so a company will pay corporation tax. At the moment, it's 19% on the profits. And then, if you want to take the money out after that, you have to take that in the form of a dividend. If you're a shareholder and then you obviously have to pay tax on that as well. So that's the way the money is extracted out. The limited company. Unless you declare yourself a salary as well insurance. The M D u. We just had a talk on that, so you would have to be make sure that the company was covered. The individual was covered as well. Shareholders I've mentioned that I've looked at some calculations just to give you an idea of what cash retention there is between the difference between a company and self employment. But it does help if you have a low earning spouse, because there is a much bigger tax benefit. If you can bring that spouse in as a shareholder, and I'll show you that slide afterwards. IR 35 has anyone heard of IR 35? So that's legislation. If I just explain very quickly. That's legislation that's been brought in by HMRC a long time ago to make sure that somebody who is acting through an intermediary through a limited company or a partnership that it's not really employment because there's more tax would be paid over to HMRC if it was employment than if it is a limited company or a partnership, because has shown you before, there's more expensive you can claim, and you know, if it's employment, someone's got to play employers national insurance as well. So I are 35. What it does is it takes the role and it says if we took this middle company out, what is the actual true reality of this job. Is this person really okay to be working through this intermediate, or are they really employed? And as I've put their true self employment not caught, um, there are rules came in 2017 that the public sector, if you're working for a public sector body, they had to determine the status in 2021 that moved to the private sector as well. Prior to that, it was the individual company who had to make that decision. So if you're working for a public sector body, uh, and they decide that you are what's called inside IR 35 really deemed to be an employee, but not with any rights as an employee. But they will deduct tax and national insurance, and they will pay that over to HMRC and in the private sector, as I say from 2021. It moved there as well. So you will always get that question when you start. If you do start limited company or a partnership when you start working, you know, for any organization, um, that comes under this criteria, they will be asking you these questions and they will have to complete the online tool to ensure that you're being taxed correctly. It is something that you will come across if you do end up doing it through a limited company. Your private work. As I said, I was going to look at the slide just to give you an idea. So this is based on 2022 23 tax rates. So if you're currently employed, you're earning pensionable pay of 90,000, and you are also earning self employment earnings. So if you've got 50,000 profit as a sole trader, um, you would be retaining. So you from the nine from the 90,000 employment plus the 50,000 self employment, what would be going into the house after tax, a national insurance and pensions? You'd be getting 76,618 if it was a company. It's very, very little difference. So that's if if you are a sole trader and self employment looking at, If you had a low earning spouse or a non earning spouse, the figures changed dramatically. Now, this is also assuming that you're drawing all the money out as a dividend, so it's not just that you're leaving the money in the company because you can leave money in the company to build up. But this is assuming that all the money's drawn out. And if you look at the difference there, if you have a low earning spouse, bring them in as shareholder and provide them 95% of the shares in the company. Obviously, there's a big difference there. You know, you've got 91,000 retained cash in the family compared to 76,000, so it's just really to give you an example going forward. As I said, the dividends, the tax free allowances like really reducing and tax rates are going up. But it's just to give you an idea. And if you are thinking about doing a limited company, make sure you speak to your accountant to give you these kind of figures just to work it out. Pen shin. As I said at the beginning, you've all have pensioned deductions. If you're in the NHS pensions scheme, majority of you will be well. Everyone will be in the 2015 scheme. Now, if you're in the NHS pensions scheme, it's a 54th scheme. So just an example. If you're earning 80,000 pensioners pay every year. It cruise you about 1480 lbs in pensions. Um, retirement age is linked to state pensions in age. So again, the majority of you might be 68. So you'll be able to draw your pensions from the 2015 scheme in full without any reduction at your state pensions in age. The scheme also has what's called dynamism patien. So there is a pot that builds up each year, so whatever your pensions pay is this year. So it was that 90,000 that accrues this pen shin, um, goes into this pensions pot, and the 90,000 is dine, um, ized each year. So it will be compounded year on year on year, so that that will. Each year you're pensionable. Pay will change, but that will go into this pensions pot, and that is increase revalued every year by what's now CPI, plus 1.5%. So this year is going to be a mega year for you all because obviously CPI is running at quite a high level. There's no automatic lump sum which there was with the 95 scheme, so that attracted a lump sum of three times the pensions at retirement, and it was tax free. So that isn't an automatic lump sum. I know it's very early in your career is to be thinking about this, but knowledge is king, isn't it? So as long as you've got an awareness of what's in the future, so what will happen as well as you're able to commute? If you did want a lump sum at the moment so you can give up 12 lbs of tension and get a pound of of lump sum, which is tax free. Pensioner pay, as I said, is based on, um at the moment, uh, the number of pas that you're doing And, um and that is your pensionable pay. Uh, you're not able to pensions anything over, um, full time pay bonuses and over time is not pensionable herb. Oh, so if you decide I don't want to go to ST mention age, I don't want to work until I'm 68. Uh, I want to go at 65 there is the possibility that you can buy yourselves out of having any reduction, your pensions. So you're paying to not get that reduction to pensions going forward because if you went at 65 your state pensions ages 68 there will be what's called an actuarial reduction to your pensions In Not many people seem to take that one up because it's quite expensive. Annual allowance charges. Has anyone heard of annual allowance charges? Tax charges? Nope. So this is a tax charge that was brought in back in 11 12 on the growth in pensions Or if you were in a pensions schemes such as mine, which is based on the amount money I put into my pension's, um, it was based on the actual physical amount with you guys. You're in a defined benefit scheme, so it's on the growth in your pensions so everyone is entitled to a 40,000 annual allowance before any tax charges. There is a slight, uh, at the bottom. There is a tapered annual labs, which will explain a bit more in in a minute, Um, so everyone is allowed to have 40,000 year before they pay any tax charges. The way your pensioned works is as a statue that 80,000 pensionable pay has accrued a pensioner about 1400 lbs this year. Also, the pot behind it is increasing. So what happens is the way this annual eye ins works is they take the pensioner the beginning of the year pensions at the end of the year, times it by 16 for some reason, and then that is measured against the 40,000. You can go back three years, and if there's any unused, you can bring those forward, and that can mitigate that. But then any excess over that is taxed at your marginal rate. So say you've got a growth of 50,000 and you've got 40,000 allowance. You'll be taxed on that 10,000 tapered annual allowance. It hits people who have got earnings over 200,000, and then the pensions growth on top of that takes them over 240,000. So hopefully at some point you're going to be hitting that. But I'm not sure, really that you will be doing that at the moment. But then that can taper the annual allowance down for every 2 lb above the 240,000. You lose a pound of your of your annual allowance, and that can reduce that down to 4000, if you any of you of also putting into personal pensions, which might be unlikely. But you also have to take those into consideration as well when you can, when you're actually adding up the the annual allowance each year as members of the NHS, um, you should be receiving a pensions saving statement. So following the 31st of March, NHS pensions should have sufficient information to work out whether or not you've been affected by this. So they produce pensions saving statements. Sometimes you have to actually request them, and they will tell you what your growth is. And then you can get your specialist medical accountant to have a look at that and say, Have I been hit by this growth? And obviously, then they can check those figures as well. Scheme pays. So this charges quite a significant charge. We're finding particularly, you know, charges some of some charges, 30,000 at the moment, 40,000 for some GPS that we're working with at the moment. So it may be that you can't afford to pay that. It may be that you've just not got the available cash because that's due by self assessment. So if you've got an annual allowance charge for 21 22 you would have to pay that along with your tax in January 23. So say this 30,000 annual allowance charge that I've got of one of my clients at the moment, they don't want to pay that. So what they're going to do is that the NHS pensions scheme enables people to use what's called a scheme pays option. So what will happen is they will pay that over to HMRC on your behalf, not done out of the goodness of their hearts, though what happens? It's alone. So each year there's interest that will be accruing on that. And then when you come to retire, your pensions will be reduced by a certain amount, and that will be ongoing forever. So we behind. We've been finding We've got some clients who are hitting this charge every year, and they've been doing that for quite a few years, so it can have a really detrimental effect on the final pensions. So as I've put their I'm not a financial advisor. I'm an accountant. So if you ever come to this, you know that you have actually got a charge and you want to think about a scheme pays speak to a financial advisor because they can give you all the implications of that and the effect that it will have on your final pensions. Because if you think about it, I mean, I've got clients who are maybe 40 who are are hitting these charges. They've got a long way to go till they draw their their pensions. And if interest is accruing on that every year, it can have a big impact on your final pensions. Just mentioned a bit about the light. Um, allowance. Again. This is sorry. This is lifetime allowance charge, and that was an allowance charge, not change light. Um, allowance. When you come to take your final pensions again, which is a long time in the future, what will happen is your pensions will be measured against a lifetime allowance. The lifetime allowance. If it is over that lifetime allowance, there's another tax charge that will be deducted. Now, what will happen? Um, at the moment, you're entitled to have a lifetime allowance of just over one million. It's one million and 70 something 1000 At the moment it's fixed to 2026 after that we don't know it's going to carry on increasing. It's been up and down a bit like a yo yo. Um, what will happen is your pensions will be then compared now your pensions hopefully is going to be maybe 100,000. At that point, that 100,000 will be times by 20 and then that will be compared to this lifetime allowance, if any. If there is any excess and you've got no protections in place, which at the moment it's unlikely that you'll be eligible for any of the protections. What will happen is that there will be a tax charge of around 25% on that that tax charge you don't have to pay immediately. It's not like the annual allowance charge. What happens with that is that they deduct that off your pensions going forward, they divide it by a number, and then they deduct that going forward forever. So there is a reduction. So again it's it's something to consider going forward. MTD just on a little quick slide on this. So as I said, you might have heard this on on, you know, adverts making tax digital. Um, from six of April 24 if any of you got any self employment that you turn over is over 10,000 or so profits from rental properties over 10,000, you're going to have to start doing quarterly reports to HMRC um, so that they get that information in, obviously on on a much more timely basis. Because if you think about at the moment, if you've got income for 21 22 they're not getting that information until January 23. So they're wanting this information and it doesn't take a, you know, a big guest to think that the considering probably going forward, that there will be more quarterly payments of tax as well for this as well. So, as I've said there, it's coming out more and more information. So just keep an eye on on that, Um, if you're if you're impacted by that, so that's me. Um, just another little slide at the end that just says, Why choose us? And it's not really just us as more. And Smalley, it's really a healthcare specialist. Why choose a health care specialist? Your area is a very complex area. You have lots of keep me awake at night. I'll tell you that. Um, you have obviously all these things with any allowances. Doctors seem to be affected because you're high earners and the way that your scheme works as well, there are constant changes that are affecting you. Constant changing with the contracts. With things like this month, you'll all have noticed that potentially your tier rates gone down on your pensions contributions. There are changes constantly to the way that the NHS pensions, schemes, working, etcetera. So you need a PSA specialist healthcare accountant who understand these things. Who's looking out for things like annual lands charges? At least considering it, You need somebody who's going to be able to help you with making those informed decisions. So, as I say, Really, you just got to make sure if you are using an accountant that their health care specialist, so go back to the previous slide, has anyone got any questions? It was a bit of a whistle stop tour, so you're probably all a bit like Lisa. No, thank you very much for that. Before we have lunch. Are there any questions at all for Lisa while she's with us. One question that the lifetime alliance charge on the pensions, uh, is that an area that we're likely to see changes in the near future from the Well, as I said, it's gone up and down. At one point, it was 1.5 million. The lifetime allowance. Then it it went up to 1.8 and it went back down, and it went to 1.25. So there have been changes at the moment. They've said they're not to change it before 2026. But obviously, you know, pensions are going to be increasing, so hopefully it will increase. But we can only deal with what we've got at the moment, okay? Nothing. Nothing. No, we're not aware of any any changes to it after 2026. Okay. Lisa, thank you so much. Thank you very, very much for coming