Forvis Mazars associate client director Shona Milbourne shares how GPs can maximise property reimbursements to help meet costs of occupying and ownership
GP practices can receive income in various ways in relation to their properties which help to meet some of the costs of occupying and ownership. At present, cost inflation remains high and it looks as though energy prices are set to rise further in the autumn and winter. Therefore, practices need to follow good housekeeping to ensure income is maximised.
Through the GMS contract, practices can get reimbursement of some premises costs in relation to the space they occupy for the provision of GMS activities. Not all costs though are reimbursed; for example, heat and light, general repairs and cleaning are not subject to reimbursements. Below are some areas that practices should consider
Business rates reimbursement
GP practices are like any other business in that they have to pay business rates to the local council. However, business rates are fully reimbursable under the GMS contract. Practices therefore need to submit information to the local commissioners at the beginning of the financial year to ensure that reimbursement comes in on a regular basis to meet the costs incurred.
Water rates reimbursement
In addition to council tax, practices also pay water rates to the local water company to cover water and sewage supplies. Again, these are fully reimbursable. Practices need to keep on top of claims to ensure they get the money back submitting invoices to support any claims made.
Clinical waste reimbursement
Costs incurred with the collection and disposal of clinical waste are fully reimbursable and practices should make the appropriate claim.
*It is worth noting that, even if you do not pay these costs in 1-3 directly, but instead through a service charge to the landlord in leased premises, this reimbursement still applies. In this case, you should get the landlord to split out the cost, so that you can claim the relevant amount under this reimbursement scheme.
Rental reimbursement
Reimbursement for rents will depend on the type of property you occupy:
A) Leased premises
Practices should receive an actual rent reimbursement. Usually this is 100% of the rent paid, although the reimbursement does need to be reviewed at any point the rent increases in line with the lease. The latest update to the NHS GMS Premises Cost Directions makes this process easier for landlords and tenants to agree the rents supported by professional surveyors at rent review dates.
B) GPs who own and occupy their premises
Practices receive reimbursement under the notional rent scheme The aim of the scheme is to provide a practice with a fair market rent for the surgery space occupied for GMS purposes. This notional rent should be reviewed every three years (or earlier if there has been a change to the premises). Practices always have the right to challenge the district valuer’s opinion of the rent assessed. Practices therefore need to keep on top of their national rent reimbursement, and in particular:
- Ensure that the form needed to start a review of the notional rent is completed as early as possible in the cycle and include all the relevant space occupied – including car parking spaces.
- Consider seeking professional advice from a specialist medical surveyor who will have access to information for your area to assess whether you are being given a reasonable assessment. It should be noted that appeal periods are short so you should act quickly on receipt of details from the district valuer as you have only 12 weeks from the date that the NHS notifies you of a rent increase to appeal.
- To maximise the rent available, your practice should be compliant with accessibility standards and be up-to-date with the most relevant infection control measures.
Grants available to improve space
The new NHS GMS Premises Cost Directions also change the maximum grant available for development of properties from 66% of the value of works to 100%. Subject to funding limitations from commissioners, this should help improve the funding available for future property developments. Practices will need to obtain commissioner approval and should not assume that the grant is automatic. It should be noted that in return for receiving grants, practices will be subject to an abatement period where the rent they receive on the new space is reduced.
The length of time that is applied for will depend on the value of the grant as follows:
- Less than £144,000; 6 years
- £144,000 or more but less than £360,000; 9 years
- £360,000 or more but less than £660,000; 12 years
- £660,000 or more but less than £1,200,000; 15 years
- £1,200,000 or more; 18 years
Ensure space rental usage is maximised
Given the current pressures on NHS general practice, most practices do not have adequate space. However, if you are in the position where you do have a spare space available that is not reimbursed under GMS, you need to either look to private providers (e.g. pharmacist, dentists, other healthcare professionals) or within the NHS to house other services.
These should be documented by a lease with the various providers setting out the terms of the lease- including the dates any uplifts get reviewed. They also need to be clear as to how service cost will be charged to the tenants. If you are renting space out to external tenants then you will not be eligible for GMS reimbursement on that space.
Utilising your premises to the maximum and making prompt claims for reimbursable elements will help in ensuring you have a successful practice financially.
Shona Milbourne is an associate client director in the Forvis Mazars healthcare team ([email protected])
