For doctors and dentists working in the NHS, change is an increasingly common (if not constant!) occurrence, from changing contracts and expectations to changing responsibilities, roles and geographical locations.
Where your finances are concerned, running through our 6-point financial checklist whenever change occurs will help the transition from ‘what was’ to ‘what will be’ much smoother. Or, better still put a note in the calendar to run through our checklist each year before your tax is due – you could end up saving yourself a lot of money!
1. Is your tax code correct?
Here’s a little exercise for you. Multiply the number in your tax code by 10. What do you get? That’s the total amount of income you can earn in a year before paying tax. If, for example, your personal allowance in 2021/22 is £12,570, your tax code will be 1257L.
The letter varies for many reasons but the main ones to be aware of are BR, X, WK1 and MTH1. These are emergency tax codes and need addressing.
2. Has your sick pay changed?
You’re now a locum
If you have moved to being a locum, you will have transferred from the security of the NHS sick pay system to nothing…no work…no pay!
Even short-term incapacity can result in a painful time financially, but what if you were too ill to practice again? Would you be able to pay the bills? Could now be a good time to consider taking out Critical Illness Cover and/or Income protection if you haven’t already done so ?
You’ve become a GP partner
Whilst you will probably have 12 months drawings as part of your practice agreement, you will be liable for the costs of a locum to replace you after a certain period. Is your income protection sufficient and does it pay out at the right time?
Who is responsible for the cost of locum insurance? Is it a group policy with the practice or are you responsible for arranging your own cover and keeping it up-to-date?
With sickness cover reimbursement now a practice entitlement for GP practices in England and Wales, how much of your locum costs will NHS England / NHS Wales pay?
Your long-awaited Consultant’s post is yours
What NHS sick pay are you now on? What are your ill-health retirement payments these days and could your family survive on them? Have your income protection policies been updated recently?
Retirement is in sight
If you are transitioning towards retirement and dropping sessions or responsibilities, is your NHS sick pay affected? With a change of roles or working patterns, the policies that suited you a few years ago are unlikely to be spot on now.
3. Has your pension been affected by recent legislation changes?
The last few years have witnessed numerous changes to pension regulation and the NHS Pension Scheme.
Have you checked how these changes either have already or will affect you? Have you fully understood the information provided by your NHS Trust and/or your financial adviser?
4. Does your NHS Pension show the correct accrued benefit?
In January 2021, there were 50,000 Full Time Equivalent (FTE) Consultants¹ in England. Add to this all the other doctors and dentists paying contributions to the NHS Pension Scheme and the numbers get huge. Mistakes will happen.
Whilst your TRS gives you your pension valuation, it’s also worth writing to the NHS Pensions Agency to get a detailed service history and/or the amount you are deemed to have contributed to your pension.
Any mistakes can be spotted early and rectified there and then, not when you’re about to retire and you realise your full service years haven’t been credited for just that…years!
5. What additional tax relief can you claim?
Long gone are the days when a form in a brown envelope landed on our doormat, signifying the fact that we needed to complete a tax return! The onus to complete your tax return is now on the individual and in a busy life it’s easy to put this off, or even not do it at all.
By simply registering online to complete a Self-Assessment Tax Return, you can often accomplish the whole process in under an hour (assuming your affairs are relatively straight forward). It’s worth it just to claim the tax relief on allowable expenses such as certain professional fees.
The GMC, GDP Association and the British Society for General Dental Surgeons are three of the acceptable organisations. The full list is available from the HMRC website. Over a cup of tea or a glass of wine one evening, you could, as a 40% tax payer, benefit from £160 tax relief on a £400 annual membership fee. It’s something to at least think about.
6. Do any personal changes affect your finances?
Marriage, moving in together, children being born, needing to pay for private education or university fees, changing when you want to retire, a change to your spouse’s work…all these changing circumstances mean your finances may need altering.
Even if you normally opt for the DIY finance approach, using a financial adviser in times of change is an option worth seriously considering, especially an IFA with experience in advising others in your occupation. The devil is always in the detail!
Which of the above did you not realise you had to check in times of change? Let us know by adding a comment below.