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MediEstates - Pension auto-enrolement: what you need to know
Pension auto-enrolement: what you need to know
Under the Pensions Act 2008, every employer in the UK must enrol specific staff into a pension scheme and contribute towards it. This workplace pension is designed to provide employees with savings for their retirement via mandatory work-based pension schemes arranged by their employer.
It is important to be aware that it doesn’t just apply to businesses; if you employ someone directly to work for you, for example a cleaner, nanny or personal care assistant, then you are an employer and will need to ensure that any eligible employees are enrolled into a workplace pension. Conversely, if you have used an agency to hire the person and the agency pays their national insurance contributions, the agency is the employer and you don’t need to do anything.

When does it come into effect?
The automatic enrolment process started in October 2012, with all employers being obliged to offer a workplace pension scheme by a specific mandatory enrolment date. These staging dates have been staggered for different sized employers, with the largest companies (those with over 120,000 employees) being required to comply from 1 October 2012 to new employers (where income is first payable between 1 July 2017 and 30 September 2017) being required to comply by 1 February 2018.
The Pensions Regulator – a public body set up by the UK government to regulate work-based pensions – will be communicating with all employers to let them know when their legal duties start. In the meantime, please refer to the Pensions Regulator website to check the exact staging date for your business: www.pensionsregulator.gov.uk.
Employers must comply with the regulations by their set staging date to avoid receiving a fine for non-compliance.

Who qualifies?
Automatic enrolment only applies to employees fitting all of the following criteria:
  • Aged between 22 and state pension age
  • Earning at least £10,000.00 per year
  • Working in the UK.

Employers cannot deny staff who are ineligible under the above criteria if they wish to be enrolled. Where an employee earns less than either £112 per week, £448 per four weeks or £486 per month, employers are not required by law to contribute to their workplace pension.

How much must each party contribute?
The government have set minimum levels of contributions that must be paid to the pension scheme by employer and/or employee. Like the enrolment date, there is a staggered scale setting out the minimum contribution, which continues to increase each year until April 2019.
  • For an employer, this begins at 1% of an employee’s qualifying earnings rising to 3% by April 2019
  • For an employee, this begins at 0.8% of an employee’s qualifying earnings rising to 4% by April 2019

The exact dates for the increase are subject to government approval and therefore may change. The government will also pay into the pension pot by giving tax relief on the employee’s contributions. If the employee is a higher-rate taxpayer, he/she can receive further tax relief on contributions, but this needs to be actively claimed through via a tax return.
Practice one
Practice location
– this expense-sharing practice was established over 40 years ago and is owned by three principal dentists. Situated within a large town in the Midlands, the practice is immediately adjacent to a health centre with an adjoining access corridor. There is plentiful free parking on site and easy access to the major road network.

Type of practice – this large NHS practice has eight surgeries, one of which is used for oral surgery. Alongside the three owners, income is generated by three associates, an oral surgeon, two therapists and two hygienists. The freehold premises, worth c.£200,000 was owned by the partners who were open to options with regards selling or retaining the premises.

Financials – the vast majority of turnover is delivered through a GDS-NHS contract worth £1,135,000 for provision of 43,000 UDAs. In addition, there was an oral surgery PDS contract for £90,000. The total annual turnover of £1,277,000 included approximately £52,000 private fee per item income.

Buyer appetite – this highly sought after practice was sold to one of our premier tier buyers. The location within the Midlands attracted a high level of interest and multiple offers were received.

Reason for sale/incoming purchaser – the partners were moving towards eventual retirement; however, they all expressed a desire to continue working at the practice post sale. The incoming buyer owned multiple practices within the locality and was purchasing as an investment opportunity.

Price achieved – £2,685,000 inclusive of goodwill, equipment, fixtures/fittings and freehold.
Practice two
Practice location
– established for approximately 35 years, this practice was purchased by the current principal in 2001 as a going concern. It is located within a popular tourist village in a rural area. The main shopping and parking facilities are just a short walk away.

Type of practice – the practice is predominately private and has two expense sharing partners who operate one surgery each and generate all of the income. The leasehold premises are located above a retail unit on the first and second floors, with no expansion opportunities available within the current footprint.

Financials – the annual turnover of £207,000 is derived from the outgoing expense sharing partner. The turnover is made up from 60% capitation, 35% fee per item and a £10,000 NHS contract consisting of 450 UDAs. Both staff costs and rental costs are minimised through the expense sharing arrangement, allowing the practice to generate a higher than average net profit.

Buyer appetite – the practice was marketed to our general market buyers. Due to the rural nature of the area buyer demand was lower than typical seen in other parts of the country; however, a buyer was quickly sourced and the practice sale completed within a nine-month period.

Reason for sale/incoming purchaser – the vendor was looking to retire and was flexible with regards working at the practice post sale. The incoming purchaser was a firsttime buyer looking to work within the practice full time.

Price achieved – £245,000 for the goodwill, equipment, fixtures and fittings.
Practice three
Practice location
– located within a coastal town in east England, this long-established practice was acquired by the current vendor in 1986. The practice occupies a converted end-terraced property within a residential area, on a busy main road. There is free on-site parking available and excellent transport links.

Type of practice – this is a four-surgery, mixed practice with two associates and two hygienists delivering income alongside the principal. The freehold premises worth c.£130,000 were to be included within the sale.

Financials – the practice benefits from a strong capitation scheme generating £445,000 per annum. The NHS contract of £195,000 for 7,000 UDAs delivers a healthy UDA rate of £27.85. The remaining private income of £140,000 makes up the total annual turnover of £780,000. Staff costs at the practice were higher than expected based on comparable businesses, however laboratory and material costs were carefully controlled at 6.8%, ensuring that profitability remained strong.

Buyer appetite – the practice was sold on our general market tier, with 462 buyers receiving the initial disclosure document and 96 buyers requesting full sales particulars.

Reason for sale/incoming purchaser – the outgoing principal was happy to stay on at the practice post sale, which suited the incoming purchaser who was an investment buyer with a small group of dental practices.

Price achieved – £905,000 inclusive of goodwill, equipment, fixtures/fittings and freehold.
Posted by: Dean Barker & Leah Groves on 20 Apr 2017

General Buyer Terms 

This agreement is in relation to MediEstates Limited whose registered office is at 1st Floor, Pacific House, Stanier Way, Wyvern Business Park, Derby, DE21 6BF acting for and on behalf of our clients ("the Vendors"); and yourself (Buyer's Name) in relation for an introduction to a prospective sale of a business as a going concern. By registering through this agreement I agree to all terms set out below:

  1. Definitions
    In this Agreement the following terms and phrases shall have the following meaning unless the context otherwise requires:

    Business
    Dental Practice business providing dental care. This business is under the MediEstates Ltd sale terms.
    Confidential Information
    Means the actual Vendors identity and all confidential information in respect of the Business, including, but not limited to, any ideas, business methods, prices, accounts, finance, marketing, research, development, manpower plans, processes, market opportunities, intentions, design rights, product information, customer lists or details, employees’ details, trade secrets, computer systems and software, and other matters connected with the products or services manufactured, marketed, provided or obtained by the Vendor, and information concerning the Vendor’s relationships with actual or potential clients or customers and the needs and requirements of such clients’ or customers’ operations.
  2. Obligation of Confidentiality
    The Prospective Purchaser agrees to treat as confidential, information supplied by or on behalf of the Vendor in connection with the sale of the Business.
  3. Exclusions
    The obligation of confidentiality set out in clause 2 does not apply to:
    1. any information received from a third party who was legally free at the time of disclosure to disclose it;
    2. any information which was already lawfully in the Prospective Purchaser’s possession prior to receiving it from MediEstates Ltd on behalf of the Vendor; and
    3. any information which is in its entirety already in the public domain.
  4. Duties of Prospective Purchaser
    1. The Prospective Purchaser shall take such a reasonable security measures to protect the Confidential Information and trade secrets.
    2. The Prospective Purchaser shall not, without the prior written consent of the Vendor, permit any of the Confidential Information:
      1. to be disclosed, other than in confidence to its legal or professional advisors;
      2. to be copied or reproduced;
      3. to be commercially exploited in any way;
      4. to be used for any purpose other than in connection with the prospective purchase of the Business;
      5. MediEstates is registered under the Data Protection Act 1998. Upon Signing this agreement you agree to follow the legal obligations of this act to protect the details of the information supplied to you, with it no to be passed outside of the control of you the prospective purchaser.
    3. The Prospective Purchaser agrees to keep a record of Confidential Information received.
    4. The Prospective Purchaser will return to MediEstates or the Vendor all documents containing Confidential Information and all copies of those documents on demand at any time which are in its possession or under its control, and for this purpose the term “documents” includes computer discs and all other materials capable of storing data and information. The Prospective Purchaser agrees that such documents remain the property of the MediEstates on behalf of the Vendor.
    5. The Prospective Purchaser must not jeopardise or re-direct the sale under any circumstances.
    6. The Prospective Purchaser must not contact the Local Area Team or CCG regarding any practice sale, by any means of media unless written permission is granted from the Vendor.
    7. To carry out own due diligence on practice purchases and accepts that any information MediEstates has supplied is information provided by the vendor and is not responsible for its accuracy or completeness.
  5. This Agreement
    The existence of this Agreement and its terms are confidential and neither MediEstates nor the Purchaser may disclose anything about this Agreement or its subject matter or implementation to any person other than in confidence to their legal or professional advisers.
  6. Duties of Prospective Purchaser
    When buying Dental practices, finance is normally needed. Our organisation operated over more than one of the MediHoldings brand, by completing this from you agree that the information can be shared to our other organisations to avoid the need to register independently and provide the best possible service.

    MediEstates will refer you to the specialist dental lending team and MediFinancial who will contact the necessary banks, whom have preferential healthcare lending rates in some cases, to ascertain which funding is available to you.
    By signing this agreement you do not have to use any of the banks MediFinancial contact, it is just another service which we provide.
  7. Deposit for Dental Practice
    If you are interested in putting forward a formal offer in for a practice, once the offer is accepted there will be a deposit required to secure the practice sale which is dependant of the practice size. This deposit is held in a client account and will be returned to the buyer on completion of the practice sale. You the buyer, will be required to sign a deposit schedule which will cover the buyer and the seller in the event that the practice sale does not proceed.
  8. Changes to this Agreement
    Any changes made to this agreement must be authorised and signed by one of MediEstates Ltd Directors.
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