Accountant Morag Miller explains what potential candidates should consider before signing up for the £20k ‘golden hello’ scheme for new partners.
Unveiled by NHS England/Improvement and the BMA in the document Update to the GP contract agreement 2020/21 – 2023/24 [1] published on 6 February 2020, the New to Partnership Payment Scheme [2] is one of several initiatives aimed at addressing primary care healthcare recruitment, retention and participation by clinicians.
Covid-19 stalled the launch of the scheme but further guidance was published on 1 July 2020 when applications opened [3].
What is the new scheme?
The scheme enables new partners to be paid up to a £20,000 lump sum, supported by a further 20% contribution towards tax and National Insurance (per full-time equivalent GP), to develop their position in their first five years as a partner. In year one, a £3,000 training fund will also be available for each successful applicant to develop non-clinical partnership skills.
Who is eligible?
The scheme is open to the following healthcare professionals (HCPs) working in general practice when joining a partnership for the first time: GPs, nurses (including ANPs), pharmacists, pharmacy technicians, physiotherapists, paramedics, midwives, dietitians, podiatrists, occupational therapists and mental health practitioners.
Practice managers are not currently eligible for the scheme, but NHSE/I have indicated they intend to include them in future and that further guidance will be published in due course.
To be eligible participants must:
comply with the requirements of a partner as set out in s86 (2) of the NHS Act 2006
be registered with their respective professional healthcare body
deliver clinical care to patients through a GMS, PMS or APMS contract (APMS contracts to have a minimum of 2 years remaining)
have an equity share partnership arrangement in place, signed and dated after 1 April 2020 and not be salaried within the same practice
commit to holding a partnership role for five years
work a minimum of two clinical sessions per week throughout the duration of the five-year arrangement
not have been a partner in a GP practice elsewhere in England
apply for the scheme only once.
Returners and international recruits can apply, as long as they meet the eligibility criteria above.
One of the overarching aims of the scheme is to support and stabilise the partnership model. As such, GPs working within an incorporated practice (company) will not be eligible. If the partnership incorporates during the five year scheme participation, clawback of scheme funds can be expected (see below).
How does the payment vary with working arrangements?
Full time working is defined as 37.5 hours per week (minimum clinical session time of four hours and 10 minutes) but be careful as time will be measured in sessions. The table demonstrates how this is calculated:
Hours worked
No. of sessions
8hrs 20 mins
2
12hrs 30 mins
3
16hrs 40 mins
4
20hrs 50 mins
5
25hrs
6
29hrs 10 mins
7
33hrs 20 mins
8
37.5 hrs or more
9
Dividing your contracted hours per week by 37.5 will calculate your FTE status. For example, 40 contracted hours per week equates to 1 FTE whilst 25 hours/week equates to 0.67 FTE.
Part-time partners (minimum requirement of two clinical sessions per week – 8 hours 20 minutes per week equating to 0.22 FTE) can apply to the scheme with the £20,000 sum and 20% contribution calculated on a pro-rata basis.
The £3,000 training fund is per successful applicant and is not pro-rated. However, to meet the reimbursement requirements, participants should start their non-clinical partnership skills training in year one of taking up a partnership role. All receipts will be required to support any claim.
Take-home pay depends on your tax bracket
Subject to parliamentary approval, the £20,000 (pro rata) sum and 20% contribution will not be superannuable but will be subject to both tax and NIC. What appears to be a very generous scheme from NHS England soon diminishes in value if your taxable income exceeds £50,000. The greater your taxable earnings, the less return you will receive from this scheme due to increased tax rates you will be subject to, alongside the NICs payable. Furthermore, income will be taxed in the year of receipt, irrespective of when the funds are withdrawn from the practice (although the practice is obliged to pay the funds to you within 28 days of receipt) so make sure you keep sufficient funds aside to cover any additional tax and NIC charges resulting from being a member of this scheme.
Below provides an illustration of take-home pay for differing income brackets.
FTE Equivalent
Earnings
Tax rate: FTE / 0.5 FTE
FTE Take-home pay
0.5 FTE Take-home pay
£50,000
20% / 20%
£18,720
£9,360
£100,000
40% / 20%
£13,920
£9,360
£175,000
45% / 40%
£12,720*
£6,960
*taxable earnings between £100k and £125k have an effective tax rate of 60% due to the loss of personal allowance.
Prior to accepting a partner appointment and entering the scheme, make sure appropriate legal advice is sought. Understand the details of the partnership agreement in terms of your appointment, your responsibilities and remuneration whilst a partner and any future exit requirements.
Successful applications to the scheme will trigger a S96 contract specific variation for the practice. This variation must be signed and returned to the issuing authority within one calendar month of receipt, following which the funds will be released to the practice.
Beware claw back
The scheme is portable should you move to a new practice as a partner, but reducing hours or leaving the partnership altogether within the first five years will result in a clawback of funds. This will be calculated at a rate of 20% for each incomplete year (on the £20,000 (pro-rata) sum and 20% contribution).
This means a FTE partner with a scheme payment of £24,000 would have to pay back £14,400 if retiring as a partner during year 3. This will be a tax allowable expense; reducing taxable earnings by the repayment value in the year you leave the scheme. As such, tax and NIC suffered on receipt of the payment will be saved in the year of clawback, although differing taxable earnings levels may result in a lower or higher tax and NIC savings than the initial amount suffered.
No one knows what the future holds so you may wish to put some funds aside to cover potential clawback. Ring-fencing and releasing a fifth of the funds to your disposable income upon completion of each whole year as a partner in the scheme will help manage your financial obligations should your partnership status change during the life of the scheme.
Conversely, to claw back, increasing hours may give rise to additional money (subject to the FTE cap and years remaining in the scheme), paid following the annual reconciliation process.
Participants who are absent due to maternity, paternity or adoption leave or long-term sickness; will not be subject to clawback as long as the position of partner is maintained throughout.
Source:
[1] NHS England. Update to the GP Contract 2020/21 – 2023/24. February 2020.
[2] NHS England. New to partnership payment scheme. [Accessed 14.10.20]
[3] NHS England. Guidance – New to partnership payment scheme. [Accessed 14.10.20]
