What’s in store for GP finances in 2018?
GP finance expert Chris Walker outlines the key financial issues that GPs should look out for over the coming year
GPs are used to dealing with uncertainty – it comes with the nature of the role. There are so many far-reaching changes impacting the profession that uncertainty continues to grow.
There are, however, some pointers for the coming year. Financially, it could be an important one for personal as well as wider practice finances. Here are five things to look out for over the next twelve months.
Could wages be going up?
2018 could see the first pay rise in the health service since 2010, after health secretary Jeremy Hunt announced the scrapping of the NHS pay cap after a seven-year freeze. However, how much pay will rise or even if any extra funding will be allocated to the NHS to cover these costs remains to be seen.
Currently, the GPs are assigned around £151 per patient according to NHS Digital, with that money used to pay for the premises and in some case staff. But as inflation has continued to rise over the years, pushing up costs such as rent, energy and other overheads, the patient allocation has failed to keep pace with inflation.
While the Chancellor’s allocation of his £2.8bn funding boost is yet to be publicised, many in the profession hope it will be spent on improving patient outcomes and that further funding will be released to cover any pay rises.
Changes to the annual allowance
GPs should be aware that they could face an unexpected tax bill due to changes in the annual allowance. This is the maximum amount that can be input into your pensions each year, without incurring a tax charge. This is currently £40,000, but since 6 April 2016 it has been tapered down to a minimum of £10,000 for those with higher earnings. The definition of earnings in this context is particularly complicated, but in very broad terms, it means people whose taxable income, including the value of any employer’s pension benefits built up during the year, exceeds £150,000.
Anyone in excess of this would be advised to check their pension input amount to establish if, when this is added to all other taxable income, their annual allowance is impacted.
If you exceed the annual allowance, you can carry forward unused pension savings from the previous three years in order to reduce or avoid any tax charge. If you still have a tax charge, it may be possible to take advantage of ‘Scheme Pays’, whereby you ask the NHS Pension Scheme to pay the charge on your behalf, in exchange for a reduction in your eventual pension benefits in retirement. The deadline for applying for the Scheme Pays option is 31 July 2018 for any excess pension savings built up in the 2016/17 tax year.
NHS Pension Scheme
The Department of Health conducted a consultation at the end of 2017 on proposals to change NHS Pension Scheme regulations. It looked at the possibility of making changes to the Scheme, including amends to the nomination process for unmarried or cohabiting partners, making the scheme accessible for staff delivering new models of care, and correcting and refining the scheme to improve the clarity of certain regulations.
The results of the consultation are still being analysed, but any changes to the NHS pension scheme should be closely monitored by all in the sector.
Anyone claiming their NHS pension will see the amount they get rise in line with inflation this year, with reports suggesting that this could be as high as 4.6%. This is small comfort for working GPs, however, who are seeing the value of the pound in their pocket fall thanks to rising inflation.
More details on state-backed indemnity
The rising cost of indemnity insurance has had a serious impact on general practice.
In October 2017, Jeremy Hunt revealed that he would be introducing a state-backed scheme for clinical negligence indemnity for general practice, which could be in place as early as April 2019.
Details of how the state-backed scheme will look are still unclear but it is likely we’ll find out more about it in the coming year. Reports suggest that it seems unlikely to cover non-NHS work so GPs working in the private sector, for example, would still need to take out additional indemnity insurance to ensure they are properly covered.
Premises costs – keep your house in order
The issues around practice premises have been a hot topic of late, as more and more practices are being hit with large accommodation costs – with many reported as being as high as six-figures. A recent open letter of complaint to NHS England from a GP in Nottingham showed that the practice had incurred premises costs of £265,000.
Complaints are being made against NHS Property Services, the facilities managers for the NHS estate. Up until the end of 2017, the BMA and NHS Property Services had tried to iron out these issues, however this seemed to have fallen flat near the end of last year.
GPs should also monitor for any changes to local premises subsidy arrangements that mean costs previously met by other NHS bodies now need to be absorbed by the practice.
Local commissioners are in some cases removing subsidies previously offered to practices by PCTs. This has resulted in many general practices being invoiced by NHS Property Services for the full cost of their occupation, and also being encouraged to agree new leases.
GPs should do appropriate due diligence as to potential liabilities, and speak to commissioners to discuss permanent arrangements which align a practice’s funding to its costs.
Chris Walker is Insight and Development Manager at Wesleyan. This article is intended to offer guidance only and does not constitute financial advice