Q: I am 54. I qualified in 1975, but lived abroad from 1977 to 1996. On my return, I completed vocational training as a GP and, after doing a few locum shifts, joined my practice as a salaried doctor until April 2004, when I became a partner.
By this time the practice was PMS. I enquired whether I qualify for seniority payment and have been told by the financial adviser at the PCT that such payments are now paid out of the global sum. My partners continue to pay themselves seniority payment but say that I am not eligible. Can you advise me?
A: As a GP principal, you are entitled to seniority payments once you have accumulated a total of six years' service in the NHS.
Under the old contract, seniority payments were based on length of time as a GP principal but now the sum increases incrementally each year.
As far as I can see, you have 10 years' NHS service in total, so your entitlement is based on the fourth level of payment.
Q: Regarding the notional lifetime pension fund for GPs, I have had conflicting advice that this is a notional '20 times annual pension' or '20 times annual pension plus the lump sum'. Which is correct? I plan to retire in April with expected NHS pension scheme annual benefits of £65,000 but also have a private pension fund of current capital value about £100,000, which I do not intend to draw on for at least five years unless forced by the new lifetime limit.
A: Where NHS pension scheme benefits are not in payment as at 6 April 2006, their value for the purposes of the Lifetime Allowance is calculated by multiplying the accrued pension by a factor of 20 and then adding the accrued lump sum.
Where benefits are already in payment at 6 April 2006, the actual pension received will be multiplied by a factor of 25 to determine the lifetime allowance value.
Any additional personal pension funds not in payment would then be added to the value of the NHS benefits.
Benefits above the lifetime allowance at the time of vesting will be subject to a lifetime allowance charge of 55 per cent where they are taken as a lump sum, 25 per cent where they are taken as a pension.
However, GPs with benefits at or near the lifetime allowance on 6 April could avoid these by applying for primary and/or enhanced protection.
Q: I am 62 and have been a full-time GP since 1978. I joined the NHS pension scheme in 1973. I have been off sick for the past three months and planning to retire on the grounds of ill health. I am not sure if it is best to retire under the old pension scheme or the new one. Am I entitled to any ill health enhancement?
A: Benefits from the NHS pension scheme can be paid early to both current members and former members who have to retire because they are unable to carry out their duties due to permanent ill health.
Where a current member has service of 10 years or more in the scheme, benefits will be increased by either: 20 years subject to the maximum they could have had by age 65; or 6.66 years subject to the maximum they could have had by age 60.
The NHS will use whichever method gives the biggest pension and total membership can never exceed 40 years.
In your case, as you have already accrued in excess of 20 years' membership and as you are over age 60, you would simply receive an NHS ill health pension based on your service to the date of actual retirement.
Q: I would appreciate clarification on leaving assets to my children. Currently our main asset is the house, in the joint names of my wife and I. On the death of the first, the share goes to the survivor and thus I appreciate on the death of the second there will be inheritance tax payable by our two sons who will benefit from the entire estate.
However, if they benefit from the share of the first deceased is there not some risk to the survivor in terms of continued occupancy of the house/bankruptcy or divorce of the beneficiaries?
It may be possible to restructure your wills to appoint the entirety of the nil rate band (currently £275,000) to a discretionary trust which will allow the capital and/or income arising to be distributed to a wide class of beneficiary including the children and the survivor of either of you. This could secure a potential inheritance tax saving of up to £110,000.
If you do incorporate discretionary nil-rate band trusts into your wills then, to make effective use of the potential relief available, it may be possible to change the ownership of your home from joint tenants to tenants in common.
Moving ownership to tenants in common provides greater flexibility where each partner's ready realisable assets are less then £275,000 as the deceased's share of the property could be included in the trust.
It may then be possible for the trustees to convey ownership of the deceased's share of the property back to the survivor who may be able to give the trustees an IOU for the debt. This would help derive greater benefit from the nil rate bands, while also protecting the survivor's security of tenure.
It would be necessary to seek advice from a legal professional specialising in estate planning matters.
Q: Could you advise me on how to maximise taper relief on surgery premises?
I am part owner with a share for 10 years. How long does one need to own property to minimise capital gains or any other taxes?
A: You only need to have owned the surgery premises for two years to qualify for business taper relief. Business taper relief is available for an asset that has been used for the purpose of your trade.
This means only 25 per cent of the capital gain (after indexation) would be chargeable to capital gains tax.
So a higher-rate taxpayer pays the equivalent of 10 per cent tax on the gain.
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PREMISES - John Hearle is a chartered surveyor and chairman of Aitchison Raffety. Email: email@example.com or fax: (01727) 844472
ASK THE EXPERTS
PENSIONS AND PERSONAL FINANCE - Kevin Quinn is a financial planner at Ramsay Brown & Partners. Email: firstname.lastname@example.org
PMS - Dr Mo Dewji is a Milton Keynes GP and clinical director for primary care contracting. Email: email@example.com
ACCOUNTANCY AND TAXATION - Jenny Stone is a partner at Ramsay Brown & Partners. Email: firstname.lastname@example.org or call (020) 8370 7746 9am-5.30pm weekdays
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