Superannuation – How It Affects The Amount of Tax You Pay

Many GP principals find that their tax payments in January and July fluctuate considerably making it difficult to manage practice cash flow.  If partnership profits remain similar each year, tax payments should remain similar.  However, often tax payments are affected as much by the amount of superannuation paid as by the level of partnership profit.

The ‘Paid’ Basis

 A tax deduction can be claimed for most expenses when the expense is incurred.  For superannuation, however, a tax deduction can only be claimed when superannuation is paid.  GP superannuation payments are deducted from the monthly sum received from NHS England.  The amount deducted is based on a form submitted at the start of the year estimating each GP’s superannuable income.

If this estimate is set too low, an additional amount is collected once the superannuation certificates are submitted.  As a tax deduction is only allowed when the additional amount is paid, if superannuation returns are submitted or processed late, then the additional payment may fall in the next tax year or the tax year after that.  Therefore, sometimes a GP may have to wait two tax years before receiving tax relief for their superannuation costs.  This will lead to fluctuations in tax payments.

How We Can Help

 We assist our GP practices with each stage of the superannuation process:

  • We ensure that the superannuation estimate made at the start of each financial year is accurate.
  • We submit the annual superannuation certificates at the earliest opportunity.
  • We ensure our GP clients receive tax relief at the earliest opportunity.