Anyone working in the NHS must be adept at managing change, but even the most skilled professionals may have felt tested by the challenges of 2024.
This year brought seismic political shifts at home and internationally, the rollout of the NHS pension scheme’s ‘Rollback’ initiative, and the introduction of Partial Retirement, to name just a few! Will this rapid pace of change continue? Hopefully not. Finding moments of calm and stability will be crucial as we move forward. While it’s no small feat to restore balance after such a turbulent year, there are steps you can take to make 2025 a year of positive financial transformation.
Use our checklist to bring order and confidence to the months ahead, especially if you have changed jobs or relocated recently. Welcome the new year with a true sense of purpose and control.
1. Is your tax code correct?
Here’s a little exercise for you. Multiply the number in your tax code by 10. What do you get? That’s the total amount of income you can earn in a year before paying tax. If, for example, your personal allowance in 2024/25 is £12,570, your tax code will be 1257L.
The letter varies for many reasons but the main ones to be aware of are BR, X, WK1 and MTH1. These are emergency tax codes and need addressing.
2. Has your sick pay changed?
Your long-awaited Consultant’s post is yours
Have you reviewed your NHS sick pay entitlements recently? Do you know what your ill-health retirement payments would be and whether your family could manage financially if needed? It’s also important to check whether your income protection policies are up to date. With the 2024 Pay Agreement for Consultants leading to significant pay increases, your coverage may no longer align with your current earnings – even if you have a high-quality income protection policy. Taking the time to review and adjust these protections ensures you’re fully prepared for the unexpected.
You’re now a locum
If you’ve transitioned to working as a locum, you’ve moved from the security of the NHS sick pay system to a stark reality: no work means no pay. Even a short-term illness could lead to financial strain, but what if you were unable to practice again due to a serious health issue? Would you still be able to cover your bills and maintain your lifestyle?
Now might be the perfect time to consider taking out Critical Illness Cover or Income Protection. These safeguards can provide much-needed financial stability and peace of mind in the face of unexpected challenges.
You’ve become a GP partner
Whilst you will probably have 12 months’ drawings as part of your practice agreement, you will be liable for the costs of a locum to replace you after a certain period. Is your income protection sufficient and does it pay out at the right time?
Who is responsible for the cost of locum insurance? Is it a group policy with the practice or are you responsible for arranging your own cover and keeping it up-to-date?
With sickness cover reimbursement now a practice entitlement for GP practices in England and Wales, how much of your locum costs will NHS England / NHS Wales pay?
3. Has your NHS pension estimate been affected by The McCloud Remedy?
The last few years have witnessed numerous changes to pension regulation and the NHS Pension Scheme.
Have you checked how these changes either have already or will affect you? Have you fully understood the information provided by your NHS Trust and/or your financial adviser?
4. Does your NHS Pension show the correct accrued benefit?
There are 1.75 million contributing members across the NHS pension scheme with pensionable pay of over £57 billion per annum (pa). NHS Pension Board Annual Report 2023. The numbers get huge. Mistakes will happen.
Every year, get an up-to-date valuation of your NHS pension from your online Total Reward Statement (TRS). As an added extra this year, many will have received, or be receiving their Remedial Annual Statement, following the McCloud Remedy. If you have, you may need to take action so don’t ignore this important document. Remember the deadline is January 2025 or 3 months after receipt. See our recent article for more details or check with your financial adviser that the figures make sense and you are clear on anything you need to do as a result.
Whilst your TRS and Remedial Annual Statements give you a good deal of information about your NHS pension, it’s also worth writing to the NHS Pensions Agency to get a detailed service history and/or the amount you are deemed to have contributed to your pension.
This way, any mistakes can be spotted early and rectified there and then, not when you’re about to retire and you realise your full-service years haven’t been credited for just that…years!
5. What additional tax relief can you claim?
Gone are the days when a bulky paper tax return would land on your doormat, serving as a clear reminder to complete it. Today, the responsibility to file your tax return lies squarely with you. In the hustle and bustle of daily life, it’s all too easy to procrastinate or even forget altogether.
Fortunately, the process has become much simpler. By registering online for Self-Assessment, you can often complete your tax return in under an hour, provided your financial affairs are relatively straightforward. It’s well worth the effort, especially to claim tax relief on allowable expenses such as certain professional fees.
For instance, membership fees for organisations like the GMC, the GDP Association, and the British Society for General Dental Surgeons qualify for tax relief. The full list is available on the HMRC website. If you’re a 40% taxpayer, you could enjoy £160 of tax relief on a £400 annual membership fee – all for the price of an evening spent with a cup of tea or a glass of wine. It’s certainly something worth considering.
6. Do any personal changes affect your finances?
Marriage, moving in together, children being born, needing to pay for private education or university fees, changing when you want to retire, a change to your spouse’s work…all these changing circumstances mean your finances may need altering.
Even if you normally opt for the DIY finance approach, using a financial adviser in times of change is an option worth seriously considering, especially an IFA with experience in advising others in your occupation. The devil is always in the details!
Once Christmas is over why not find a peaceful corner and work your way through our 6-step financial reset in anticipation of the best possible start to 2025?
Which of the above did you not realise you had to check in times of change? Let us know by adding a comment below.
The concepts and suggestions in this article must not be viewed as advice. As always we recommend you approach a Financial Adviser who will take your circumstances into full consideration before providing advice.