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Planning ahead for employers

19 March 2019

As we count down to the end of the current tax year, medical practitioners should be taking stock of their position as employers to both check their compliance position and allow them to plan ahead for the challenges of 2019/20.

Firstly, it is important for practices to review their staffing position, in terms of staff numbers and total pay bill. For large medical practices (usually large scale mergers), if your headcount will exceed or be close to 250 staff at 5 April, it is vital to consider whether Gender Pay Gap reporting is required. While you will have until 5 April 2020 to report on the pay gap, you will need to take a snapshot of earnings of all staff at the year-end for the return. Read more on Gender Pay Gap reporting.

Medical practices with a total annual pay bill of £3m will have to start paying the Apprenticeship Levy. While this may seem high, it is important to remember that where organisations are deemed to be connected for Levy purposes at 5 April, their pay bills will be aggregated for the £3m threshold test. Assuming you don’t breach the £3m threshold, no Levy liability will arise but, if the organisation is growing rapidly, you will need to monitor the threshold on a monthly basis. Read more on the Apprenticeship levy.

Rising costs in 2019/20

Practices that employ support staff on the minimum wage will have to plan ahead for pay increases from 6 April that range between 3.5% and 5.4% depending on the age of the worker. Even for practices without minimum wage employees, with average wage increases exceeding the rate of inflation, planning for next year’s wage bill is vital.

The outcome of the consultation to the proposed increase in employers’ superannuation contributions from 14.38% to 20.68% has been published. The increased rate of 20.68% will be implemented from 1 April 2019. For 2019/20, NHS Business Service Authority will only collect 14.38% from employers, with central payments being made by NHS England and DoH and Social Care for the 6.3%. NHS England will pay the balance for those employers who are within the scope of full funding, this includes Clinical Commissioning Groups and GP practices. Arrangements for 2020/21 will be confirmed in due course.

GP practices should continue to be mindful of the Final Pay controls rules. These rules were introduced to discourage employers from paying inflated earnings in order to secure their staff a higher NHS pension. Final pay control is applicable to all Officer and Practice Staff members of the 1995 Section of the NHS Pension Scheme, including 1995/2015 transition members. From 1 April 2014, if a member receives an increase to pensionable pay that exceeds the ‘allowable amount’ the relevant employer is liable to a final pay control charge. The allowable amount is the lessor of:

  • The member’s pensionable pay in the relevant year, or
  • The member’s pensionable pay in the previous year plus the consumer price index plus 4.5%, or
  • The percentage increase in the member’s pensionable pay for the current year compared with the previous year.

Final pay control charges will only emerge when a member starts to draw their pension. At the point of award, NHS Pensions will calculate the charge and invoice the relevant employer. Make sure you take these rules into account when increasing pensionable pay in your practice.

Off-payroll workers

Of course, it is not just workers on the payroll that need to be considered. Medical practices fall within the rules for Public Bodies that use the services of a worker who is paid ‘off-payroll’ (supplied by an intermediary). Since April 2017, wherever locums or other workers are supplied by an intermediary, the practice must check on their status to assess if they would be employees and/or office holders if engaged directly by the Practice. Where the individual would be a deemed employee or office holder:

  • If the Practice pays the intermediary directly, the Practice must deduct PAYE and NIC from the payment. In addition, the Practice will be required to pay employer’s NIC. Payments will be required to be made through RTI in the same way you pay your other employees.
  • If the Practice uses an employment agency (or other third party) to source the Locum and pays that third party, the Practice will be required to assess if the new rules apply and advise the third party of the outcome of that decision. The third party must then deduct PAYE and NIC and pay employers NIC.

While the BMA has recently published a template locum practice agreement that practices can use, it should be remembered that what a worker’s contract says is only part of the picture. In assessing the employment status of a locum, a practice must consider a wide range of factors surrounding the locum’s work as set out in HMRC’s Check employment status for tax (CEST) tool. This test equally applies whether the locum is engaged directly or through a third party.