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Do your accounts deal with employer’s superannuation correctly?

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I am a GP in a four partner practice and I receive an equal share of profits. I joined the NHS pension scheme in 1991 and therefore, my earnings are capped for pension purposes. Also the senior partner is now receiving his NHS pension and no longer pays superannuation. We are concerned that we will be paying the cost of the other partner’s employer’s superannuation. How can we ensure that this is dealt with fairly in the accounts?

Firstly, it is important to understand what has changed since the introduction of the new contract and why you need to ensure that the GP’s employer’s superannuation is dealt with correctly in the accounts.

GPs are unique, as you are both self-employed individuals and are also employees of the NHS. Your contribution to the NHS pension scheme is 6% of your superannuable income, and since 1st April 2004 the definition has changed to your NHS profits.

As you are also employees of the NHS, the PCT, as your notional employer paid the employer’s contributions into the scheme up to 31st March 2004. Many GPs will not have been aware of this as it was dealt with directly.

Not only has the definition of superannuable income changed since 1st April 2004, but also the GP’s employer’s superannuation, which was previously paid by the PCT, is now funded through your global sum and MPIG correction factor. The income from the quality and outcomes framework and enhanced services also includes an element of income towards the cost of the employer’s contribution. As practices have been given this additional funding, you are now responsible for paying your own employer’s contribution for you as GP’s on your superannuable income.

Currently the PCT are making deductions for both the employees (your 6% contribution) and the employer’s contribution (14%). Your employee contribution will continue to be shown as part of your drawings in the accounts. The employer’s contribution should be shown as an expense in the accounts or offset against the additional income to pay this contribution.

If the profits are shared equally, then each you might expect to have an equal share of the employer’s contribution. However, although you share profits equally, your individual NHS profits for superannuation will not be the same for each partner. The reason for this is that the calculation of NHS profits will also include your individual personal expenses and any outside income that is now superannauble. If a partner joined the NHS pension scheme after June 1989, and their NHS profits are higher than the Inland Revenue earning cap which for 2004/05 is £102,000, then their individual NHS profits will be capped to £102,000 and this will be the amount that superannuation will be calculated on.

As you can see from table A, Dr A no longer pays superannuation and therefore his employers contribution is nil. If the employer’s contribution is not separately identified to each partner and is shared equally, then Dr A is paying £12,775 of the other partner’s employer’s contribution.

To ensure that this is dealt with fairly each partner’s employer’s contribution can be allocated to them as a prior expense, before the balance of profits are shared equally.

Practices whose accountants do not specialise in dealing with GP’s should ensure that they inform them of the implications of the employer’s contributions.

It’s also worth pointing out that any GPs, who are not contributing to the NHS pension scheme, will still need to complete the annual certificate of pension profits as this also determines the amount of seniority income they are entitled to.


  Total Dr A Dr B Dr C Dr D
Profits per the accounts

NHS Profits

NHS Profits for superannuation purposes

Employer’s superannuation (14%)

Share of employer’s superannuation if shared equally

















May 2005