Following last week’s budget, there has been a lot of information surrounding what this personally means for GPs. However, here at Practice Index, we felt that PMs needed to have a greater insight into what this actually means for practices and how they can benefit from new words such as ‘superdeduction’ or phrases such as ‘help to grow’?

Specialist medical accountant James Gransby sets out the key points for general practice:

A major theme running through the Budget was increasing tax revenue from profitable businesses, with £48bn extra tax revenue predicted to be coming from the Corporation Tax increase by 2026.

While some may have breathed a sigh of relief this doesn’t, however, mean that GP practices have been left unscathed. There are some Budget changes that will affect GP practices, both good and bad:

National Living Wage

There will be some extra costs for GP practices paying staff the National Living Wage who will see this increase from £8.72 to £8.91 per hour which represents a 2.2% increase.

Personal tax allowances

With personal tax allowances frozen, any practice manager who is a higher rate tax payer should also expect to pay extra tax. If the bands increased by inflation over the next five years, then the current £50k basic rate threshold might have been expected to rise to nearer £55k and so this element of income would then be taxed at 40% rather than the 20% basic rate. This would result in up to £80 per month extra tax to be paid by those earning over £55k in five years’ time.

Practices operating as Ltd companies

Corporation tax is set to increase from 19% to 25% from April 2023 for any companies with profits over £250k. This will be bad news for any GP practices who operate as Limited Companies. Incorporation is usually a bad idea for GP practices for a number of reasons, but those who have incorporated due to the allure of attractively low Corporation Tax rates of 19% are likely to find that their overall tax bill will be higher than comparable practice partnerships after 2023.

130% ‘superdeduction’

There were headlines about a ‘superdeduction’ of 130% in relation to investment spend. However, it has now been clarified that this is only available to limited companies and so will not be available to most GP practices. There is one caveat here since it may be useful for any practices undertaking self-build surgery projects. The numbers would need to be worked through carefully though, since while the superdeduction may benefit practices holding the newly built surgery in a company, rather than in the partnership, the extra corporation tax payable on rental profits may outweigh the benefits.

Help to Grow: Digital

A new UK-wide scheme will be launched in the autumn to help businesses save time and money by adopting productivity-enhancing software. This will combine a voucher covering up to half of the costs of approved software up to a maximum of £5,000, and free impartial advice, delivered through an online platform. Whether this measure will be available to GP practices is yet to be announced. Further information is due in the autumn.

Help to Grow: Management

There will also be a UK-wide management programme to upskill businesses over three years. The programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals. It will run over 12 weeks and will be 90% subsidised by government. Again, whether this scheme will be available to GP practices is yet to be announced.

Support for trainees

The Budget also included increased support for traineeships for young people and payments for employers who hire new apprenticeships to further help those looking for work. How this will be available to GP practices is not yet clear, but there should be no reason why GP practices would be precluded from these measures and so it could be a useful area to watch for further detail.

About the author:

James Gransby is Vice Chairman of the Association of Independent Specialist Medical Accountants