This report presents the final range of results from the GP Earnings and Expenses Enquiry for the financial year 2005/06. It expands on the report published in October 2007. The new sections are Detailed Results for Contracted GPs (Section E), Headline Figures Time Series for Contracted GPs (Section F) and Accounting year-end analysis (Section G). The Distributional Results for Contracted GPs (Section C) and the Glossary have been expanded.
The results for contracted GPs are based on a sample of 17,581 GPs who report one or more sources of self-employment income with accounting year ending in the final quarter (1st January 2006 to 5th April 2006). Figures for contracted GPs relate to earnings, expenses and income derived from all self-employed sources, as reported on tax returns, and so include private as well as NHS work.
The results for salaried GPs are based on a sample of 2,743 salaried GPs who were identified as being salaried (i.e. submitted a self-assessment tax return for the year 2005/06 and were found to have more income from employment than self-employment). Figures for salaried GPs relate to earnings, expenses and income derived from all employed and self-employed sources, as reported on tax returns, and so include private as well as NHS work.
For both full-time and part-time contractor GPs the results do not include earnings from employment (as a salaried employee) and relate to NHS and private work. The estimates of earnings exclude an estimate of employer's superannuation contributions in the tax year, which will include any Primary Care Organisation (PCO) clawback for previous years.
For salaried GPs the results presented include both full- and part-time GPs, and refer only to those salaried GPs who submitted a self-assessment tax return for the year 2005/06 and have been identified as being salaried (see Annex A for further details).
The data source for the survey is HM Revenue and Customs' (HMRC's) tax self-assessment (SA) database and reflects the data held at May 2007. Analyses were run on an anonymised dataset by statisticians in HMRC Knowledge, Analysis and Intelligence.
This enquiry is the second to be affected by the new General Medical Services (nGMS) contract. As with the results relating to 2004/05, there have been some changes in methodology compared to that used under the old contract, which are discussed further in Annex A.
This report has been agreed by the Technical Steering Committee (TSC), which has representation from the four UK Health Departments, NHS Employers and the British Medical Association.
For 2005/6, £11,764 has been deducted from average earnings figures for UK GPMS GPs as an estimate of the amount included on tax returns in respect of employer's superannuation contributions paid in 2005/06. It should be noted that this figure is higher than that deducted in 2004/05, which was £6,234. There are a number of reasons for the £5,530 increase in the adjustment, which include:
- increases in net income
- wider compliance with HMRC guidance on the tax treatment of superannuation contributions on tax returns
- clawback by PCOs for superannuation contributions not withheld from global sum payments in 2004/5, because the GP/PCO had underestimated predicted earnings for the year.
It is not possible to quantify the relative effects of the different factors. Provided the HMRC guidance for reporting superannuation contributions are, and continue to be, followed at a similar level to 2005/6, there will be no large changes in the average level of the adjustment from improved compliance.
Year on year variation in the adjustment will continue to be affected by increases in net income and the effect of clawback. A range of estimates of the effect of pension clawback is given in Annex B. It is possible that the effect of the issues is greater this year than it will be in subsequent years, and it will be necessary to consider future impact once 2006/7 data is available in 2008.