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Questions and Answers on the Calculation of Superannuable Profit

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1.  What are the changes to the calculation of superannuation?
Under the nGMS contract superannuation will be calculated on the GP’s share of NHS profits as opposed to being calculated on a proportion of GMS income.  

GP’s will be required to complete a form which shows how their NHS profits have been calculated and this will be submitted to the NHS Pensions Agency/PCO.

2.  Who will be responsible for completing the form?
It will be the responsibility of the GP to complete and sign the form.  As with your tax return, your accountant can assist you with its completion.

3.  What additional information will I need to give to my accountant to enable them to complete the form?
It will be very important that your income is clearly split between NHS income and non-NHS income. You may need to amend your accounting records accordingly.

Depending on the level of your non-NHS income you may also need to provide a more detailed analysis of non-NHS expenses.

4.  What is the definition of NHS-Income?
NHS Income covers the following:-
Income paid to provide GMS/PMS services
Income paid directly from GMS/PMS providers
Employment with PCOs or other NHS bodies
Work with local authorities under collaborative arrangements with the NHS
Practice based work in educating/organising medical students, undergraduates, vocational or postgraduate training.

5.  Some of my expenses relate to non-NHS income and NHS income, how will I calculate the split of my expenses?
If your non-NHS income is less than 10% of your total income and less than £25,000 then your total expenses will be apportioned using the ‘standard method’.  This method calculates the non-NHS expenses based on the percentage of non-NHS income to total income.    

If the ‘standard method’ cannot be used then the ‘alternative method’ should be used.  This method splits the expenses between those that are wholly attributable to non-NHS income and NHS income.  There will of course be expenses that cannot be split, and these expenses will be apportioned using the ‘standard method’.

6.  The PCO are currently deducting superannuation contributions, how have these been calculated?
The superannuation contributions being deducted are based on an estimate of NHS profits.  Some PCOs have estimated the profits based on the previous year’s superannuable income plus 10%, others have asked practices to provide an estimate themselves.  The deductions are your contribution at 6% and also the employer’s contribution at 14%.  

7.  What happens if my actual NHS profits are higher than the estimate the PCO have used to calculate my current superannuation contributions?
Once your actual superannuation has been calculated, it will be compared to the superannuation already deducted from your statements.  If the actual superannuation is higher than the deductions made, a balance will be payable.  If lower, then the difference will be refunded.  Remember that the balance due will be 20% of your superannuable profits. (i.e. your 6% plus the employer’s 14%)

8.  My accounting year-end is September, should I change my year-end to March?
It will not be necessary for you to change your year end if your year-end is not March.  An adjustment will be made to take account of differing year ends.

9.  What should I be doing now?
You do not need to complete the form now, as it will not be issued until next year.  You may need to adjust your record keeping so that non-NHS income and expenses can be identified by your accountant where relevant.

10.  I am a salaried GP and also do locum work.  Will these changes affect me?
No.  Your superannuation will continue to be calculated as before.