2024 Autumn Budget for Healthcare Professionals

Overview

The recent Autumn Budget, delivered on 30 October 2024 by the Chancellor, has introduced notable changes impacting tax systems and public spending, especially affecting the healthcare sector. With significant tax hikes and reforms in employer contributions, it’s crucial for GPs, private practitioners, opticians, dentists, pharmacists and other healthcare professionals to understand these adjustments and prepare accordingly.

Key Budget Highlights for Healthcare Businesses:

• Increase in Employer’s National Insurance Contributions (NICs)
  1. The rise in NICs from 13.8% to 15% will impact healthcare practices, especially for large employers, such as multi-partner GP practices, large opticians, and dental practices. This increase applies to all employees earning above £5,000 annually (down from £9,100).
  2. Action Point: Practices may need to review payroll budgets and consider adjusting staffing or benefit plans to manage the increased NIC costs effectively.
• Capital Gains Tax (CGT) Increases
  1. The CGT rates for general assets have risen from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers. Rates on residential properties remain unchanged.
  2. Impact on Practice Ownership Transitions: For dentists, opticians and pharmacists considering practice sales or exits, this increase could significantly affect the tax on gains. Strategic planning for disposals may help mitigate tax liabilities.
• Corporation Tax Changes
  1. Corporation tax remains capped at 25%, but the Chancellor announced a permanent “full expensing” allowance for plant and machinery investments.
  2. Opportunity for Clinics and Private Practices: This allowance can benefit healthcare practices looking to upgrade equipment, as investments in qualifying equipment can be fully deducted in the year of purchase.
• Inheritance Tax (IHT) and Inherited Pensions
  1. The government has extended the freeze on IHT thresholds until 2030, with restrictions on relief for agricultural and business properties beginning in 2026. Additionally, inherited pensions will now face IHT as of April 2027.
  2. Consideration for Legacy Planning: Private practitioners and practice owners should explore trusts or other structures to safeguard assets for beneficiaries.
• Employment Allowance and National Minimum Wage Increases
  1. The Employment Allowance has increased from £5,000 to £10,500 per year, easing NIC liabilities for eligible smaller practices.
  2. Additionally, a rise in the National Minimum Wage benefits employees but may increase payroll obligations for healthcare businesses reliant on support staff.
  3. Impact: Practices should plan for higher payroll costs due to the wage increase and assess eligibility for the boosted Employment Allowance.
• VAT Implications and MTD Expansion
  1. The VAT registration threshold will rise to £90,000 in April 2024. However, the abolition of the Furnished Holiday Lettings (FHL) regime, effective from April 2025, could impact healthcare professionals with investment properties.
  2. MTD will apply to sole traders and landlords with income over £20,000 by the end of this Parliament, expanding its April 2026 rollout for higher-income earners.
  3. Planning Note: Healthcare professionals with rental or secondary income should prepare for MTD requirements and consider restructuring rental investments in light of the FHL changes.
• Other Noteworthy Announcements for the Healthcare Sector
  1. Increased NHS Funding: A £22.6bn rise in the NHS budget may influence resources and compensation structures within the public sector.
  2. Public Pay Linked to Productivity: Future pay rises for NHS workers will be linked to productivity, which could impact workforce satisfaction and retention.

Conclusion

2024 Autumn Budget for Healthcare Professionals

With substantial tax increases and spending reforms, healthcare businesses will need strategic financial planning. Whether it’s preparing for higher NICs or taking advantage of capital allowances, now is the time to reassess budgets, plan for tax efficiency, and consider long-term financial impacts. For a detailed review and personalised advice, feel free to contact our expert healthcare tax and accounting team. The team who wins The 2024 AVN Practice Differentiation Award for Most Inspiring Accountants