Following the issue of the NHS White Paper, clinical commissioning groups (CCGs) have been forming all over the country.
The Paper does not set out any prescribed format for the groups, but did provide for the transfer of Primary Care Trust (PCT) staff to CCGs.
To allow these staff to retain access to the NHS pension scheme, CCGs would need to be afforded employing authority status and whether this will actually be the case is still unclear. For the doctors who have already taken up positions on the Board, if the income is paid directly by the PCT, it will be pensioned by virtue of it being “board and advisory” work.
The treatment for tax and seniority purposes will depend on how the income is remunerated.
How the income is remunerated will be determined by the CCG and how it has been structured, but the doctor may be given a choice as to what form the income is paid and where this is the case, the following points will need to be considered:
The taxation will depend upon the post and the nature of the work undertaken and the manner in which this is performed.
Where the doctor is a board member, the status will depend upon whether the role is as an executive or a non-executive. Due to the level of responsibilities and structure of the work undertaken, an executive is more likely to be treated as an employee and the income will be salaried.
Whilst non-executive posts are also likely to be treated as employed posts, they could be treated as self-employed where the role is less onerous. The income received from such a post will be much lower than an executive would receive and is likely to be below the National Insurance thresholds, so provided the tax is paid (through self assessment) the treatment is less critical.
If a doctor is advising on clinical matters, the post could be treated as self employed, provided the doctor has a say in when the work is performed and how it is performed.
If the post is treated as employed, pension contributions will be deducted at source from the income.
Where the post is paid on a self employed basis, the doctor will be responsible for paying the employees and employers contributions. Obviously, under this option, the doctor is disadvantaged, unless they negotiate with the PCT for the payment of the income plus the 14% employers superannuation to ensure they are not out of pocket.
Income which is paid through the payroll will not be treated as pensionable income for the purposes of calculating a doctor’s seniority entitlement. The income is shown on the superannuation certificate, but because it is superannuated at source it is then deducted further down on the certificate.
Income which is treated as self employed will be included in the calculation, regardless of whether it is paid to the doctor personally or to the practice and prior shared.
Many GP partnerships choose to pool income from outside appointments. The decision normally depends on whether or not the work is performed during the doctor’s own time.
There is nothing to prevent this approach being adopted for a CCG post provided the income is paid into the partnership (and not through the CCG payroll). Where this is the case, it is then possible for salaried posts to be treated as self employed instead.
In summary, the decision of being employed or self employed makes little difference to the doctor for tax or pension purposes, but for seniority, a self employed treatment is more beneficial.
If the CCG does not give the doctor the choice and the post is salaried, then pooling the income and making use of the HMRC concession to treat the income as self employed, is an alternative solution to protect the seniority position.
Healthcare Group, September 2011