bing
Skip to content
Go back

Article Tags:

Please choose from the following:

What does the budget mean for medical professionals?

What does the budget mean for medical professionals?

Against the backdrop of an uncertain economic outlook stemming from the global Covid-19 pandemic and its associated restrictions, Chancellor Rishi Sunak has today delivered the government’s Spring Budget 2021. 

With Sunak stating that the government are “using the full measure of our fiscal firepower to protect the jobs and livelihoods of the British people”, what could the Spring Budget mean for you as a medical professional?

Pensions and savings

It was announced during the Budget that the pensions lifetime allowance, which usually rises with inflation, has been frozen at £1,073,100 until April 2026.

This risks discouraging savers from putting money towards their retirement and has particular implications for doctors approaching the end of their careers, who may be in danger of breaching their allowance and facing punitive tax charges. 

Doctors will be forced to consider turning down extra shifts to reduce their pension growth, or even retiring early, at a time when the NHS is under extreme pressure.

Parminder Gill, Advice Policy Consultant, Wesleyan, commented: “This is a real kick in the teeth to high-earning clinicians who will have been working around the clock on the frontline of the coronavirus pandemic.”

“Freezing the lifetime allowance creates a less-favourable tax-regime for pension savers and these changes need to be carefully considered by anyone saving for retirement.”

Self-employed

The Self-Employment Income Support Scheme has also been extended with a fourth grant worth up to 80% of average monthly profits during February, March and April, with a cap of £2,500 a month. Access to the grant was also widened to an extra 600,000 newly self-employed people. A fifth grant will cover May until September this year, with more details to be confirmed.

The scheme has proved a lifeline to workers, including many in the dental sector, but it’s important to remember that grants are subject to income tax and National Insurance contributions.

Wesleyan’s Michael Copeland commented: “Individuals will need to be careful to factor this into their own financial plans, and ensure it is reported correctly on their returns to HMRC, pending further government guidance.”

Tax

The 20% Income Tax basic rate will increase from £12,500 to £12,570 next year, when the higher rate threshold will also increase from £50,000 to £50,270. Both rates will then be frozen until 2026. The allowance usually rises with inflation, so this freeze risks pushing many more taxpayers into higher bands.

The current Inheritance Tax limit of £325,000, which has remained unchanged since 2011, has been frozen until April 2026.

The annual exempt amount for Capital Gains Tax was also frozen until April 2026.

The 5% reduced rate of VAT will be extended for six months to the end of September, when an interim rate of 12.5% will be introduced for another six months, in a move that will benefit dentists offering private cosmetic treatments. The standard rate will return in April 2022.

The longstanding freeze on Fuel Duty will remain in place, which the Treasury says saves the average driver around £100 a year.

Stamp Duty

The Stamp Duty holiday, which increased the tax threshold from £125,000 to £500,000, has been extended by three months until the end of June. From then it will be set at £250,000 until the end of September.

A new mortgage guarantee scheme will enable first-time buyers and existing homeowners to secure a mortgage on homes worth up to £600,000 with just a 5% deposit. 

Wesleyan’s Jonathan Halberda said: “This will broaden the options individuals have for financing a home and will be particularly welcomed by the younger generations. However, buyers will still need to pass lenders’ affordability checks to access a mortgage.”

If you have any questions regarding the financial wellbeing of you or your business, your local Wesleyan Financial Services Consultant is on hand to offer practical support, advice and guidance. 

To arrange your no-obligation financial review for a time and date that best suits your schedule, please follow this link.

Find Your Financial Consultant

Financial Consultant Form

More information about FCs

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

Click for more information about the Wesleyan group of companies.

© 2021 Wesleyan Assurance Society