The New to Partnership Payment Scheme
The new to partnership payment is an incentive scheme set up by NHSE to encourage Doctors to take on a partnership position after a sustained decline in the number of GPs in partnership in recent years. The scheme enables health professionals to receive a payment of £20,000 if they take up a full-time partnership role for the first time after 31 March 2020. There is also a further £4,000 available for on cost expenses and £3,000 for training in respect of early partnership skills development.
The incentive is also available for physiotherapist, pharmacists, nurses and other clinicians taking up a partner position. Practice managers have not yet been included but it is hoped they could be added later. The scheme became effective from 1 July 2020 but applicants are eligible from April 2020.
Please see guidance from NHS England for the full criteria – https://www.england.nhs.uk/wp-content/uploads/2020/10/new-to-partnership-2020-21-guidance.pdf
Treatment in partnership accounts and individual tax returns
The income should be included under NHS income, which can then be distributed to the individual via a prior share of income before the remainder of profits are distributed. As such, this income would form part of the taxable partnership profits on the individual’s self-assessment tax return and would be subject to Income Tax and National Insurance at their marginal rate. The whole amount will not be taxed on receipt as there is potential for claw back, so an amount equivalent to 1/5 will be taxable each year.
Any partners who leave the partnership before the end of the five-year term will have to repay 20% of the funding for each year not completed. We would therefore recommend that the lump sum payment is not directly withdrawn from the practice, but instead is utilized as the new partner’s initial buy in fund for their share of the working capital of the practice.
For NHS pension purposes the incentive is non-pensionable income.
The application form can be found on this link – https://www.england.nhs.uk/wp-content/uploads/2020/06/N2PP-Application-Form-v1.5_distributed.pdf
Before applying for this incentive, consideration must be given to the following:
- An up to date signed partnership agreement or suitable letter on practice headed paper must be attached to the application
- Evidence of a current GMS/PMS contract, will be checked by NHSE with CQC, but a copy of an APMS contract must be provided
- Although partnership agreements might be expensive every partnership should ensure they have a valid and up to date one for their practice
- The possible effect of the additional income on personal tax. For example, this incentive could effectively mean earnings are pushed into higher rates of tax, or income may reach levels above £100,000 where there would be loss of personal allowances to consider. It may be worth asking your accountant for a tax estimate before applying.
- The guidance does state that there is an additional 20% (Pro rata to FTE) available for on costs (tax & NI) which is payable with the incentive payment.