£20,000 golden hello scheme could trigger hidden costs, accountants warn

A government scheme offering £20,000 golden hellos for new partners could trigger hidden costs for practices and add far less than expected to applicants' income, accountants have warned.

Golden hello payments (Photo: Viktoria Rodriguez/Getty Images)
Golden hello payments (Photo: Viktoria Rodriguez/Getty Images)

New partners who started after 1 April 2020 will be able to apply for the golden hello payments under an incentive scheme agreed as part of the 2020/21 GP contract. Rollout of the scheme has been delayed by the coronavirus pandemic - but officials confirmed this week it will launch on 1 July.

The incentive scheme comes after a sustained decline in the number of GPs in partnership roles in England over recent years. General practice has lost more than 3,600 full-time equivalent GP partners over the past four years.

The scheme's aim is to 'grow the number of partners, stabilising the partnership model and helping to increase clinicians’ participation levels so that primary care and the patients it serves have access to the workforce they need', according to NHS England guidance.

Golden hello

However, accountants have warned practices and potential new partners to look carefully at the offer before signing up.

Applicants' take home pay may not rise by anything like the headline amount if the golden hello pushes their income over key tax thresholds, according to specialist medical accountant Andrew Pow of Mazars LLP.

Practices, meanwhile, could face significant legal fees for redrafting partnership agreements - which must be in place for the golden hello to be claimed. Practices could also face significant financial risk from the potential need to claw back part of the incentive payments if a new partner chooses to leave or reduce their working hours after less than five years, accountants have said.

Mr Pow told GPonline that this clawback process was his 'biggest concern'.

For successful applicants, the golden hello payment would be transferred to their practice and then passed on to them as a lump sum. The full £20,000 is available to someone taking on a full-time partnership role for the first time - with smaller payments available on a pro rata basis for people working less than full time. However, if the individual leaves the role after less than five years, 20% would have to be repaid for each incomplete year up to the five-year term.

Clawback

Mr Pow said: 'If someone leaves or reduces their working hours then there is a clawback off the practice contract. So it’s tricky in that practices are expected to pay over the full amount to the new partner but they may then need to recover money if they leave.'

In the event that someone left on bad terms, this could prove a complicated process, he warned.

NHS England guidance also says applicants must have signed 'a legally-liable, equity-share partnership agreement'. Mr Pow said: 'Not all practices have these, even though it's advisable, and very few have them updated for when a partner starts - so it will delay payment and may add in cost having agreements updated.'

Legal fees for drawing up a partnership agreement from scratch could run to several thousand pounds for a practice, he warned - and even amending an existing agreement to add the new partner and new clauses to cover handling of the golden hello could be costly.

Accountants are also debating how the payment should be handled from a tax point of view - whether it should be counted in a single tax year or spread over five years - and have pointed out that applicants need to beware of the overall impact the incentive payment could have on their take-home pay.

GP tax bill

The extra income is taxable, although a further £4,000 contribution for on-costs is available through the scheme to 'mitigate this in part' - along with a £3,000 training grant.

GPs repaying student loans will see 9% of any increase in pay going straight to their student loan bill. Meanwhile, any new partner whose income was pushed over £100,000 by the incentive payment would see their tax-free allowance reduced - and would become ineligible for the government's tax-free childcare scheme.

Practices and the new partner would also have to monitor carefully their working hours to ensure they did not fall below the weekly hours required - with a 37.5-hour week required for the full-time payment.

Mr Pow suggested it would have to be an 'extreme' case to make the golden hello not worth applying for - but warned that both practices and new partners should approach it with caution and be clear about the costs and benefits.

NHS medical director for primary care Dr Nikki Kanani said the scheme offered 'a fantastic opportunity for healthcare professionals working in primary care to take the next step in their careers' and was part of 'a raft of recruitment and retention initiatives to support general practice and the partnership model'.

BMA GP committee chair Dr Richard Vautrey said the partnership model is 'the foundation of general practice and vital for its survival and sustainability'.

He said action was vital to halt the decline in GPs in partnerships - and that the golden hello scheme would give new partners confidence in taking on the role.

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