GPs should ‘breathe a sigh of relief’ after Budget, say accountants
Some high-earning GPs will pay hundreds of pounds more in tax under changes announced by the Chancellor in the Budget - but most will see no change in their pay packets.
Medical accountants told Pulse they expected GPs earning £120,000 to pay £425 more in tax annually, due to changes in tax thresholds, although those earning £100,000 or less will pay £15 less in tax each year.
Those earning over £150,000 will benefit from a reduction in the highest tax band, which will be reduced from 50% to 45% from April 2013.
Mooted changes to limit pensions tax relief for higher earners were not included in the budget, but adjustments to the higher 40% rate threshold mean that high earners will be hit.
Bob Senior, director of medical services at RSM Tenon accountants and chair of the Association of Independent Specialist Medical Accountants, said: ‘It could have been an awful lot worse.'
‘There was a lot of debate over getting rid of the higher rate of tax relief on pensions contributions, which would have hit most GPs, and also reducing the annual allowance from £50,000 to £40,000, and that would have also been really bad news.'
‘Many GPs should be breathing a sigh of relief that both of those were not raised.'
Michael Ogilvie, chartered accountant at OBC The Accountants Ltd, said: ‘I don't think it is going to make much of a difference really. Although if you are paying tax at 40% then make sure you use your spouse's allowance.'
The Budget increased the income tax personal allowance by £1,100 from April 2013, to £9,205. There will also be a £2,125 decrease in the basic rate limit (20%), taking it to £32,245, and the higher rate threshold (40%) will be set at £41,450.
The additional rate of income tax will also be reduced from 50% to 45% from April 2013. The basic and higher income tax rates for 2013–14 will remain at their 2012–13 levels.