Q. Would you be able to explain how pension liability is calculated for partners? I make added years contract contributions at 2.44% as well as employer and employee contributions.
A. As a partner, the calculation of your pensionable profits is complicated as it is never the same as your profits per the accounts. There is a 7 page end of year superannuation certificate that needs to be completed to calculate your pensionable profit.
Your profits per the accounts will need to be adjusted to remove non-NHS income such as medical reports, also an element of practice expenses will relate to the non-NHS income which needs to be adjusted. Your personal expenses such a use of motor vehicle, mobile telephone etc will be deducted before arriving at pensionable profits.
Your profits includes the funding for the employers 14%, which needs to be removed to calculate your final pensionable profit.
From this final pensionable profit you would expect to pay the following:
- Employee contribution - this depends on your level of income. For income between £70,631 and £111,376.99, this would be 13.5%. A full list of contribution rates can be found here.
- Added Years at 2.44%
- Employer contribution at 14%
Jenny Stone is a partner at specialist medical accountants Ramsay Brown & Partners. Details on how to ask Jenny your questions can be found here.