The Department of Health and Social Care has confirmed that from 1 April 2019 the NHS Pension Scheme employer contribution rate will increase from 14.38% to 20.68%.
The rise is disclosed in the Department’s response to a consultation, and ignores the fact that most respondents to that consultation disagreed with the proposal.
The rise will affect both the practice profits and personal superannuation contributions of GPs.
Section 4 on page 13 onwards of the consultation covers the contribution increase. In summary, the main points with paragraph references are: -
From a personal tax perspective, in relation to the partners own ‘employer’ contributions, if HMRC treats the extra funding as taxable trading income, the extra funding would attract a 2% Class 4 National Insurance (NI) Charge. This cannot be offset by the additional employer contributions paid out, as pension contributions do not qualify for NI relief.
If you would like to know more about the proposed changes to NHS Pensions, please contact our GP and NHS Pensions expert Steve Tucker for more information.