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Written by Wesleyan

How will medics be affected by the Autumn budget 2021?

doctors
financial planning
4 min read

Today, Chancellor Rishi Sunak laid out his Budget for a post-Covid economy as he sought to support the ongoing recovery against a backdrop of rising inflation and concern over the cost of living. 

With a difficult balancing act to strike between supporting public services and filling the hole in the nation’s finances, we explore what today’s key announcements could mean for you as a medical professional. 

Tax

There was disappointment that the Annual Allowance remained frozen at £40,000 and the Lifetime Allowance at just over £1 million, which continues to have a particular impact on medical professionals approaching the end of their careers.

Parminder Gill, Advice Policy Consultant at Wesleyan Group, said the freeze was “clearly a step in the wrong direction”.

He said: “The Lifetime Allowance has already been reduced by around £800,000 since 2010 and freezing the limit, coupled with the rising inflation, means more hard-working individuals – including those in key public services – are going to fall into HMRC’s scopes and could face extra tax charges.”

Alec Collie, Head of GP segment at Wesleyan Group, said it was disappointing that the Chancellor hadn’t taken the opportunity to reform or scrap the annual allowance taper threshold – a mechanism that adds unwelcome complexity to GPs and doctors’ pension calculations.

He said: “The current limit and rising inflation mean that some GPs and doctors are still facing tax charges once their pension contributions and growth in their pension are taken into account.

“The government has not considered the additional work that our health professionals took on to deliver the very successful vaccine roll out.

“It’s critical this is looked at urgently as we enter the busy winter period as every hand will be needed on deck – any risk of professionals being personally financially penalised for continuing to go above and beyond for their patients and provide the much-needed booster jab is simply unacceptable."

Health and social care

Today’s budget confirmed the new Health and Social Care Levy, designed to raise £12 billion a year to tackle the backlog in the NHS and address shortages in the social care sector.

It means a 1.25% rise in National Insurance from April 2022, paid by employers and employees, and a 1.25% increase in tax on income from share dividends.

But there was no specific action to address the lack of new medical professionals coming into the profession, which is putting GPs under increased pressure.

Alec Collie said: “Money for new equipment and infrastructure is welcome, but without skilled staff to use it, the benefits simply can't be fully realised.

“It’s disappointing that the Chancellor isn’t putting more resourcing towards directly addressing the workforce shortages our health service is facing.”

Earnings

The National Living Wage will rise from £8.91 per hour to £9.50 from April next year, while the pay freeze imposed on public sector workers last November will be lifted.

How much public sector pay packets will increase will be based on recommendations from independent pay review bodies, though it is unlikely to keep pace with inflation, which is forecast at 4% for the next year.

Simon Rake, head of the teachers division at the Wesleyan Group, welcomed the announcement, but cautioned: “Medical professionals have served the public tirelessly throughout the pandemic and it is only right that they don’t get left behind – particularly after decades of real-term pay cuts.

“It remains to be seen, however, exactly how much of an increase they will get and whether this will be an actual, real-term boost that beats inflation. 

“With the country facing rising costs of living, anything less would be a real kick in the teeth, ultimately making it more difficult to attract and retain the medical professionals we need.”

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