by Katie Collin, a partner at Ramsay Brown — part of Sumer Group — a chartered specialist medical accountancy firm that provides tax and accounting services for the UK’s medical sector.
The Budget is perhaps the most significant event in the financial calendar. Accountants and financial advisers across the country tune in to see what changes are coming down the track and, crucially, how policy shifts will affect their clients. For me, that means assessing how changes to the tax landscape will impact family doctors.
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Compared to last year, there is certainly far less to go on. With the news that the UK’s fiscal buffer has shrunk, though, this Budget will likely require a raft of tax hikes to raise the extra revenue needed for the Government’s ambitious spending plans. And it seems that capital gains, family businesses, and mansions might all be on the tax table.
You might think, then, that GPs and the NHS workforce needn’t worry. But previous Budgets have already taught us that the primary healthcare sector can be hit hard by these announcements.
Last year, pension tax rumours led to mass withdrawals that cost individuals thousands, and the same is true this time around. The impact is being felt in healthcare, with many senior doctors still considering taking their pension and retiring early, affecting the number of GP appointments available. Previous years’ National Insurance hikes ramped up the pressure on GP practices, too, affecting recruitment strategies, running costs, and even future financial planning.
Against a backdrop of other financial policy mishaps and below-growth funding increases, these unintended NHS consequences do even more damage. We have a workforce of disillusioned GPs already under tremendous strain – the current tax environment pushes them away from taking on more work and we’re seeing other health systems in the likes of Australia prove attractive prospects. It won’t take much to push GPs over the edge, which is why the Government must tread carefully.
One such area they should pay attention to is capital gains tax (CGT), because although Healey seems to be putting some distance between himself and the policy, it could still be an option. Any increase would have under-the-radar implications for health organisations and GP partners in particular, as it directly impacts how they approach selling, or not selling, their practice’s premises: a major aspect of how they plan for the future.
Increasing CGT, whether by a small amount or so that it comes in line with income tax, could also disincentivise GP partners from upgrading their premises. We should want successful GPs to expand and improve their facilities, given it can help them deliver far better patient care and enhance patient experience. Shifting capital gains tax could leave them worse off, though, reducing returns on the property and forcing them to reconsider.
One other area likely to crop up in Healey’s Budget – that is far more obviously linked to the NHS – is the proposed ‘National Care Service’. Sweeping care reform is certainly needed, and Burnham’s attention to the matter is right, but funding an NCS is no small matter. As the Government decide how to roll it out, they must consider the NHS implications at every turn.
First, they must be careful about where they get the money from in the first place. Current levels of tax are already pushing many doctors that I work with to drop hours; adding to the burden further will only push more away. A strong care system needs a strong health system, and undermining the NHS workforce will scupper any plans for care reform before they even get off the ground.
Second, policymakers must be sure not to sideline NHS initiatives. There is still a lot of work to be done, and if the Government fail to continue with this work, and Starmer’s 10-year plan in particular, progress will falter once again.
So, while the fanfare around this Budget has been limited, there is a lot at stake. With the number of health professionals leaving the UK continuing to rise, Healey must ensure his financial plans do not push our doctors even further away.
