Most of the tax damage a GP does to their own finances happens in the stretch straight after CCT. Registrar pay arrives through PAYE, deductions already taken, nothing to think about. Then a partnership share turns up, or a diary full of locum sessions, and HMRC stops helping itself and starts sending letters instead.
The clinical workload in that same period is heavy, which is exactly why the admin slides down the list. These are the ones that keep coming up.
The January Bill Arrives With Next Year’s Bill Attached
A GP filing their debut self-assessment as a self-employed earner tends to budget for the tax owed on the year just finished. HMRC wants that, and it wants an instalment towards the year already underway, calculated from the liability that was just settled. A further instalment follows in the summer.
Payments on account start as soon as a liability is large enough and little tax has been collected at source, which describes almost every new partner and almost every locum. So the year that has ended and the year in progress get billed in the same demand.
Spending Drawings as Though They Were Salary
Partnership drawings are an advance against a profit share nobody has calculated yet. Monthly figures are agreed early on last year’s assumptions; QOF and enhanced services land at scattered points in the year; and the annual accounts reallocate everything.
New partners read their drawing as take-home pay because that’s what a salary had felt like throughout training. The accounts then arrive showing a profit share above what was drawn, which sounds like good news right up until the tax on it gets worked out.
The Locum Pension Window Closes Fast
This one is unforgiving, and it costs money that can never be clawed back.
Freelance GP locums who want their sessions counted towards the NHS pension have to submit Form A and Form B, with contributions, within a short window that starts running from the end of the work itself. Not from the date the invoice was eventually paid. PCSE rejects anything that arrives late.
Form A needs practice approval before Form B can be finished, so a locum starting near the edge of the window is relying on a practice manager to turn something around in days. Some will, and it’s really not a safe bet.
Locums who miss the window lose that pensionable service outright, and often don’t notice until it’s too late. A monthly reconciliation habit, done early in the following month, does more for a locum’s retirement than any amount of year-end catching up, and it’s the sort of routine Ramsay Brown accountants put in place.
Leaving the Annual Allowance to an Autumn Letter
The annual allowance caps how much pension can be built up in a year before a tax charge applies, and what counts against it is growth in the pension rather than contributions from a payslip. In a defined benefit scheme, growth can jump for reasons unconnected to cash moving anywhere.
Newly qualified GPs assume this is a consultant problem, and early on, they’re right. It stops being true faster than expected. A move from registrar pay onto a full partnership share, combined with a strong year at the practice, can push the input amount up sharply. Add private work, and the taper comes into view, which applies once income clears two separate tests set by HMRC and drags the allowance down towards a much lower floor.
Pension savings statements go out in the autumn for a tax year that ended the previous spring, so the information arrives late by design. Scheme Pays can settle a large enough charge from the pension itself, with an election deadline well after the self-assessment one, and GPs who don’t know it exists end up paying the charge out of income.
