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Changes in Finance and Taxation for 2008/09: Impacts on Practices and Individuals

This update outlines key changes in finance and taxation for the 2008/09 fiscal year, including the implications of the Minimum Practice Income Guarantee (MPIG) and the new capital gains tax policies. Important updates include an increase in global sum payments, the introduction of an extended hours Directed Enhanced Service (DES), and reforms to capital allowances. The update also addresses changes affecting non-domiciled individuals, tax return deadlines, and superannuation contributions. This information is essential for understanding the impacts on both practices and individual taxpayers.

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Changes in Finance and Taxation for 2008/09: Impacts on Practices and Individuals

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  1. GP Finance Update – Changes for 2008/09 Jenny Stone, ACA Ramsay Brown and Partners Ramsay House 18 Vera Avenue London N21 1RB Tel: 020 8370 7705 E-mail: Jenny@ramsaybrown.co.uk

  2. Minimum Practice Income Guarantee (MPIG) • DDRB announce global sum payments to increase by 2.7% to £56.20 • Any increase in global sum will simply reduce the correction payments • Practices with MPIG will therefore not see an increase in core practice funding • Future of MPIG • What does this mean for PMS practices…..

  3. MPIG Example

  4. Extended Hours • Access DES & choice & booking will be replaced with extended hours DES (equivalent to £2.95 per patient) • 58.5 QOF points allocated to extended hours • Extended hrs DES £2.95 per patient • If don’t do extended hours will lose income • However, need to consider costs of offering extended hours e.g. staff costs, costs of keeping surgery open for longer

  5. Changes to Capital Gains Tax • Major reform from 6th April 2008 • Capital gains taxed at a rate of 18% • Indexation and taper relief which would reduce a capital gain abolished • Introduction of entrepreneurs relief for business assets if individual ceasing trade • Entrepreneurs relief will mean business assets effectively taxed at 10% • Entrepreneurs relief can be claimed on more than on occasion up to a lifetime limit of £1m.

  6. Capital Gains Example

  7. Tax Relief on Capital Expenditure • Purchase of fixture, fittings and equipment qualify for capital allowances • Capital Allowances prior to 6th April 08 • First Year allowance of 50% • Thereafter writing down allowance - 25% • Capital Allowances from 6th April 08 • 100% of cost up to annual Investment limit of £50,000 • Writing down allowance – 20% • Cars over £12,000 maximum £3,000

  8. Taxation of Non-Domiciled Individuals • Prior to 5th April 08 • Individuals who are UK resident, but not domiciled in UK, declare overseas income on basis of remittance • From 6th April 08 • Non-Dom individual has been resident in UK for 7 yrs out of past 10 yrs • Declare all overseas income & gains on arising basis • If want to use remittance basis would have tax charge of £30,000 • De minimis limit of £1,000

  9. Tax Return Deadlines 08/09 • Deadline for paper tax returns bought forward to 31st October 2008 • Tax returns filed online deadline remains 31st January 2009 • Automatic £100 deadline if late • Can appeal against penalty of individual if tax paid by 31st January

  10. Superannuation Contributions for 08/09 • Employee contributions increased from 6% • Rate of 08/09 based on 06/07 earnings • Employer’s rate still 14% • Earnings Cap removed for employees cont’b • Earnings cap still applies to GPs have added yrs contracts prior to April 08 and were previously capped

  11. QUESTIONS?

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