State pension reforms to benefit self-employed GPs

GP partners and locums could receive an extra £1,500 a year from the basic state pension under a government overhaul, but salaried GPs face annual losses of more than £450.

State pensions: overhaul creates GP winners and losers
State pensions: overhaul creates GP winners and losers

A government white paper published last week laid out plans for a single-tier state pension from 2017.

Under the plans, employed workers - including salaried GPs - who have contracted out of the state second pension through joining an occupational scheme such as the NHS pension scheme, will no longer be able to claim a rebate on their national insurance contributions (NICs).

This means they will face an effective tax rise of 1.4% of their pay.

Russell Finn, of specialist medical accountants Ramsay Brown & Partners, said the changes would leave salaried GPs paying hundreds of pounds more in NICs.

He said that a salaried GP earning £60,000 (after superannuation payments) would currently be paying around £4,050 in NICs. Following the move to a single-tier state pension, that salaried GP would pay £4,537 in NICs: a difference of £487.

Mr Finn said that partners and locum GPs would not see any changes to their state pension contributions or national insurance payments because they were self employed.

However partners and locums could see an increase of around £1,500 a year to the basic state pension that they receive once they retire, Mr Finn said.

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