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Following the Autumn Budget, we anticipate the specific breakdown of the funding for the Department of Health and Social Care (DHSC). The Autumn Budget signified a monumental shift for the healthcare sector in the UK as the sectors plea for increased funding to continue providing high levels of care have been listened to. Despite not yet having the exact breakdown of the funds it can be said that those working within the healthcare sector will be relieved at the proposed two-year plan as it begins to place the NHS service at the forefront of our Governments mind. There is a slight caveat to that, as it is thought that potentially Primary Care will not be the main beneficiary of the increased funds.

In this issue we review what we know so far from the Autumn Budget and what other changes from the Budget may have impact on those within the sector.

Has the promise of increased funding for the healthcare sector been fulfilled?

The Chancellor proposed on 30 October 2024, an increase of £22.6 billion in spending for the healthcare sector. The Autumn Budget documents present this as a real-terms annual average increase of 4.0% for the Department of Health and Social Care (DHSC). Funding for the healthcare sector has been offered through means of a one-year budget (phase 1) which sets out an updated 2024/25 spending review, alongside a longer-term plan labelled phase 2.

The additional funding announced for this year and next should significantly help to stabilise services provided by the NHS. However, several unknowns still remain, including the impact of future staff pay increases and how the Government will deal with the increasing costs to employers through National Insurance contribution.

National insurance contributions (NIC)

NIC will have a huge impact on a lot of employers, an employer on a salary of £50,000 will see an increase of the employer’s NIC cost from £5,644 to £6,750. This will be a significant increase for large practices, or even small practices struggling to pay staff and will have a detrimental effect. It is unclear whether there will be exemptions to those within the healthcare industry and it seems there is a lot of speculation as to who is affected and not. Thus far it is believed that the NHS and the public sector will be exempt however social care and GP surgeries will be not. Once the budget for healthcare is confirmed we will assess how the changes will impact employers and share further guidance should NIC impact employers.

Read more about the changes to NIC employers’ contribution here.

Business Asset Disposal Relief (BADR)

Changes to BADR will mean that should you be looking to exit your business or are looking to sell your share of the surgery premises, practice, clinic etc, now may be a good time. Certainly, exiting your business before the increase in BADR from 10% to 14% in April 2025. After this, the next upheaval to BADR will be in April 2026 and will increase the rate of CGT payable from 14% to 18%. The 8% increase would have significant impacts on many choosing to sell after this period by significantly reducing net gains from the sale. Should you be contemplating exiting a business, acting now may be the best solution for you. Speak to our experts today to get the best advice for your specific situation.

NMW increase

The National Minimum Wage increase, set to take effect from 1 April 2025 will see an increase again on wage thresholds. The greatest increase being an 18% increase to Apprentice rates and rates for 16-17 year olds. The 6.7% increase in the NLW despite being necessary for employees, further exacerbates the issue of underfunding. It leaves questions as to whether practices will be able to make the changes initially declared by Labour such as ‘decreased waiting time and patient satisfaction’ when once again staffing issues will be at the forefront of managers minds.

The national minimum wage NMW increase will be detrimental and close margins further alongside increased overheads, running costs, NIC increases etc.

Overall…

We await final breakdown of the DHSC spending before we can fully label the Autumn Budget as a success or not for the healthcare sector, and it will very much depend on the specifics.

For more insight on Price Bailey’s analysis and opinions from the budget you can read our articles here.

Following the general election and the news of a new Labour Government, July has been filled with optimism and discussion of changes within the healthcare space. The election, held on 4 July 2024, was one of the most momentous in history and is set to bring forth necessary changes. In this month’s issue we discuss IT systems and their impact on the NHS following the global IT outage, the potential for GPs to become LLPs, the BMA ballot for collective action and released data on patient satisfaction.

IT systems outage

On 19 July a global IT system failure, described as one of the worst in history, and impacting numerous sectors worldwide, caused significant disruptions within the healthcare industry. The BMA GP committee reported a critical flaw in the SystmOne clinical system which largely affects data processing- including mapping patient appointments. GP surgeries and pharmacies across the UK were particularly affected as the failure prevented patient processing, access to records, and therefore the ability to see and treat patients.

This incident highlighted the fragility of current systems within the NHS and our heavy reliance on automation. This system failure resonates the need for the new government to maintain their promise to streamline NHS booking systems and software. This being said, the events also highlight a need for ‘backup’ systems and stricter policies for such events to minimise disruption. The BMA states that ‘considerable backlogs’ are still to be expected over the coming weeks as healthcare providers battle backlogs and waiting times in an already overstretched environment; leaving patients unable to access prescriptions, clinical documentation, and medical history.

BMA hopeful for GPs to be able to become LLPs

The BMA is advocating for GP partners to be able to form limited liability partnerships (LLPs) as part of a new national contract with the Government. The BMA’s GP Committee for England emphasised in recent guidance that the ability for GP partners to become LLPs should be a central feature of the new contract to mitigate personal risks. The 2018 GP Partnership Review recommended that the Government introduce this flexibility to encourage more GPs to enter partnerships.

The limited liability status will protect the member’s personal assets from the liabilities of the business which will be attractive to some GP Partners. Under the current GMS contract, all partners are jointly and severally liable for any losses, the GPCE have said this is ‘not palatable for future generations’ and ‘not sustainable for current partnerships’. Under an LLP there is no individual responsibility for each other’s actions.

There will need to be a lot of changes in regulations for LLPs to work, one being NHS Pension access which is currently not possible.

The potential shift towards allowing GPs to form LLPs could significantly alter the landscape of general practice, offering financial protection and encouraging more doctors to consider partnerships- particularly in a time where funding for general practice is lacking.

BMA ballot ends 29^th July 2024

The BMA’s ballot for collective action opened for GPs in England earlier this month and is set to close on 29 July. ​GP members who run their surgeries will vote on whether to support the BMA’s call for collective action. The decision to launch the ballot came after the BMA formally entered a dispute with NHS England following the member referendum on the 2024/25 GMS contract changes in March.

​​Dr Katie Bramall-Stainer, chair of BMA’s General Practitioners Committee in England urges “all GP partner and contractor members to vote ‘yes’ and show the next Government that GPs can no longer tolerate running practices with less and less funding as demand continues to spiral. We want to provide patients with a quality service but it’s increasingly clear, and our patients can see for themselves – we simply cannot do that without sufficient investment and more GPs in our surgeries.”

Collective action may be the best way for GPs to highlight the urgency in which the proposed changes need to be made in order to protect practices and their patients. This is something we have seen just recently following a GP surgery in Cambridgeshire who have had to resort to handing back their contracts following financial hardships. Should action not be taken we will see this increasingly happen.

Data on patient satisfaction/dissatisfaction

Published on 11 July 2024, the GP Patient Satisfaction Survey serves as a valuable tool for reflecting on how GPS are performing individually as well as comparing regionally.

The Health Equity Evidence Centre have published analysis of the data from the GP Patient survey. The data indicates that overall patient satisfaction has marginally improved since 2023 but is still substantially lower than pre-pandemic levels. Considering inequalities in quality, funding, and workforce across the country the data supports a socio-economic gradient in patient satisfaction.

The impact of socio-economic inequalities in primary care is shown by the fact that 79% of patients in the least deprived areas reported a “fairly good” or “very good” overall experience, compared to only 72% in the most deprived areas.

To ensure that all NHS patients in the UK have equal access to healthcare and support, it is essential to secure sufficient funding for general practices to provide relevant services to local communities. The COVID-19 pandemic created significant backlogs, resulting in an increased workload today. A well-supported workforce is crucial to tackling this issue, and this can only be achieved if there are adequate funds to pay healthcare professionals. Funding must be the cornerstone of efforts to resolve these challenges.

The coming months should provide a great deal of insight as to how the challenges facing the UK’s healthcare system will be addressed by a Labour Government and we will provide detail accordingly once clarification or further detail has been finalised. Should you have any questions regarding anything in this article or wish to discuss how any of these changes may impact you, please contact one of our Price Bailey experts.

April and May have provided an array of changes as a result of action and discussion following the Spring Statement. April sees the start of the new financial year too which is always a busy time, and this year is no different as we see some important financial changes being implemented for GPs and the NHS. In this edition we detail the latest concerning property, basis period changes, IR35 and proposed NHS reforms in the event that a Labour government is elected in the next general election.

Property

The 2024 Premises Costs Directions

This month we transitioned into the updated 2024 Premises Costs Directions (PCDs), which provide guidance to NHS England on the provisions of premises funding to GP practices in England. The 2024 Directions replace the 2013 Directions and take effect from 10 May 2024.

The impact of the 2024 PCDs is still unknown, however, below are details of some changes that are worthy of discussion:

• Priority funding projects are no longer restricted to a minimum of 33% and a maximum of 66% funding, the acquisition of development land (as well as premises) is expressly mentioned, and fit-out works and improvements to premises required due to regulatory changes are now provided for. In principle, funding should be accessed in more situations, which will greatly benefit many practices.
• The ability for an ‘appointed valuer’ (defined as a suitably qualified professional registered with the Royal Institution of Chartered Surveyors, RICS) to conduct valuations for NHS England, previously exclusively handled by the District Valuer Service, should alleviate the considerable delays in the approval of funding applications.
• GPs can now apply for grant funding of up to 100% of the project value.

Changes likely to be less welcomed by practices:

• Applications for notional rent and rent reimbursement include a condition that contractors must inform NHS England of their acceptance or rejection of the funding assessment within 12 weeks. If they fail to do so, NHS England is unable to proceed with the payment.
• New information has been provided regarding the amount of rent reimbursement available for leasehold premises and the process for submitting a rent reimbursement application. This may lead to delays in decision-making or changes in the reimbursement amount. Additionally, NHS England and ICBs are prohibited from directly negotiating with landlords about rent determination, which may not be favourable to landlords.
• Alongside the expansion of grant funding, NHS England must now consider a wider range of factors. Their authority to reclaim funding has been increased, and the timelines for repayment and abatement have been extended.

With the changes to 2024 Directions brings uncertainty for many and their will no doubt be a period of getting accustomed to the changes after so many years following the 2013 Directions. No additional funds have been announced for the ICB budget lines, meaning it is unlikely GPs will have any new resource and GP surgery premises will not change.

Practice property loans and interest rates

Still concerning property, the topic of interest rates in the sector has been sparking conversation. The state of the market in 2024 is still tainted with uncertainty, however the return on investment has begun to rise again after a turbulent few years. The demand for property in 2023 decreased due to rising interest rates and inflation. When interest rates increased however, property valuations were unpredictable and the cost of borrowing increased, therefore many GP partners looking to buy in could not afford to buy in. Some outgoing partners are having to wait longer for their property payment and the valuations are causing concern where they may have dropped.

After recently attending an ICAEW conference where property was discussed, the consensus was that this year, interest rates are set to decrease, valuations have already come down (10-15%,) and the return on investment has increased. The return is set to be higher than the cost again and the demand is beginning to bounce back.

Despite these positive glimpses, it is still more important than ever to consider loan type, repayment plans and repayment length. It is important to thoroughly consider the length of repayment and locking in the interest rates on a loan in the event that interest rates could decrease.

Basis Period Changes

Currently, partners in GP practices pay income tax on their share of profits for the accounting period ending in the tax year of assessment – this is known as the current year basis. So, if you have a 30 April year-end, for the tax year 2022/23 (ending 5 April 2023), a partner will be assessed on profits from the financial year ended 30 April 2022. This causes a delay in the tax being paid compared to a year end that runs in line with the tax year. If your practice reports to 31 March (or 5 April) each year, you are not affected by the basis period changes.

Moving forward all partners will be taxed on profits that arise in the period 6 April to 5 April the following year – this is known as the tax year basis. The practice year-end will no longer be relevant for the taxation period. The change to a tax year basis came in from 6 April 2024 and will impact the 2024/25 tax year reporting. The 2023/24 tax year, which started on 6 April 2023 is a transitional year and will be subject to special rules.

For some partners, these transitional changes will see tax payments increase considerably in 2023/24 and payments on account for 2024/25 also. Careful planning will be needed to ensure partners can meet their obligations as there are no additional drawings or increase in practice profits to support these payments as it is in essence a catch-up exercise.

A question that arises from this basis period change is: ‘Should we change our practice year-end?’ With the NHS year-end aligned to 31 March, a move could be a good option. For practices that do change, a set of accounts will be prepared up to 31 March 2024. For those that do not, accounts can continue to be prepared as normal and it will be for the practice accountants to apportion profits from those accounts into the relevant tax year.

For a practice continuing with a year-end date falling later in the year, the date of accounts finalisation needs to be considered. Accounts would ideally need to be finalised in advance of the following 31 January, to apportion profits from two accounts years, for purposes of the relevant tax returns. If this is not possible, estimates can be used but they will need to be revised and finalised at the earliest opportunity. Using estimates will possibly cause uncertainty with tax payments as figures are finalised and payments are updating, including payments on account.

IR35 changes

A significant change has been added to IR35 regulations effective from April 6 2024.  Some healthcare professionals provide their services via Personal Service Companies (PSCs) meaning IR35 changes must be complied with. The key changes are that:

• HMRC will now consider taxes already paid by workers and intermediaries when assessing PAYE liabilities for deemed employers.
• This approach aims to distribute liability costs more fairly between workers and deemed employers.

We expect individuals providing services through intermediaries, such as PSCs may see reduced PAYE liabilities, and should mean a fairer tax system as taxes already paid by workers are acknowledged.

Recent Announcements

The potential of a Labour Government

This week, Labour have released their five mission points in preparation for their full manifesto. One of the mission headings is NHS and concerns ‘getting the NHS back on its feet.’ Should Labour come into parliament, the NHS will be at the forefront of their missions and are preparing for building an NHS for the future.

Some key takeaways from their mission statement (full details of their proposals can be found on the Labour website link above):

‘As an immediate priority, Labour will grip the biggest crisis in the history of the NHS, tackling the massive waiting list backlog. We will do this by getting the basics right and then undertaking the long-term reforms to make sure the NHS is fit for the future.

• Faster NHS treatment delivering two million more appointments a year by paying NHS staff more to work evenings and weekends.
• Fewer cancer deaths by improving early diagnosis for cancer by doubling the number of NHS scanners.
• 700,00 more urgent dentist appointments.
• Fast access to mental health services by recruiting 8,500 new NHS mental health staff.
• Return of the family doctor by cutting red tape so that patients can see the same GP each appointment if they choose to.’

We await the full Labour party manifesto to see how these changes will develop and more detail can be provided, however the proposed NHS changes and funding will be welcome by many in affected industries should we see a Labour government return.