Specialist advice for Consultants

Whether you are working privately or in the NHS or a combination of the two, you need to be sure that you are organising your affairs to minimise your taxes and ensure your pension is secure.

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Tax Planning for Consultants

Tax planning for consultants always depends upon their personal and financial circumstances. There is no ‘one size fits all’.

Some questions we are frequently asked by consultants

Having said that, there are some questions that regularly crop up:

Can I pay my spouse a salary or a pension contribution out of my Private Practice income?

The short answer Is YES. If you pay your spouse a salary or a pension contribution at a commercial rate for the work they do for your private practice, HMRC will not object.

Depending upon your individual circumstances this could save a significant amount of tax.

But you do need to be careful, see ‘Paying Family Members‘.

Can I make my spouse a shareholder in my Limited Company and pay them a dividend?

Following the decision in a leading tax case, provided a spouse holds ordinary shares which entitle the spouse to more than just income, the dividends paid on those shares will be treated as the spouse’s income.

We have many consultant clients who have relied on this decision for many years with no challenge from HMRC.

If I retain funds earned from Private Practice in my Limited Company, and withdraw the funds when I finally retire, will I obtain Entrepreneur’s Relief and pay tax at 10%, rather than 40%?

These transactions were exempt from certain anti-avoidance tax provisions until 2016.

Since 2016 anti-avoidance provisions could be used to tax a distribution (the final release of funds) as a dividend rather than a capital gain. In these circumstances a tax rate of 32.5% or 38.1% rather than the 10% Entrepreneur’s Relief rate will apply.

We are not aware of any cases since 2016 where these anti-avoidance provisions have been used to attack so-called ‘money box’ companies.

We would usually suggest that a regular amount of funds are distributed annually by dividend (taxed at 32.5% or 38.1%) the balance of the funds being retained.

If the 10% tax rate is then challenged on a final distribution we would argue that the company was not a ‘money box’ company, that regular dividends have been paid and that there was no abuse of the tax system.

I understand individuals pay more tax on ‘buy to lets’ than companies. Could I transfer my small ‘buy to let’ portfolio to a Limited Company?

Broadly speaking limited companies get a full deduction for the Interest charge on a ‘buy to let’ mortgage whilst a higher rate individual tax payer does not.

However, if an individual transfers a small ‘buy to let’ portfolio to a limited company the transfer may:

  • Trigger a capital gains tax charge.
  • Create a stamp duty charge.
  • There is also the potential difficulty of persuading a lender to move the ‘buy to let’ mortgage to the limited company.

For these reasons we would not normally recommend you transfer your small ‘buy to let’ portfolio in this way. The advice may be different if you have a substantial residential property rental business.

Nothing noted above should be construed to be tax advice. In all instances you must take tax advice from a professionally qualified advisor who will advise on your individual circumstances.

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Contact us for specialist medical accountancy services for Consultants

If you’re looking to plan your finances for the future or trying to find an answer to a problem then get in touch today.

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NHS PENSION REVIEW

Are you in danger of being hit with a huge tax bill on your pension growth? Our NHS Pension Review Service can provide an advance warning of impending pension issues.

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TAX ENQUIRY PROTECTION

HMRC have increasingly got GPs in their sights and many Practices have been subject to lengthy tax investigations. Make sure you’re covered with our annual insurance scheme.

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Talk to one of our Medical Accounting Team for free. We can discuss your circumstances and how we can help you achieve better financial management, reduce your tax bills or plan for the future with a tailored fixed price plan.

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We have a panel of subject experts and a team of professional accountancy support staff to make sure your specific needs are met reliably and cost effectively.

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What our clients say…

Dr David Paige, Consultant Dermatologist, The Holly Private Hospital

The reason I was first attracted to Nichols was when I heard Mr Nichols explain the complexities of the Life-time allowance and the Annual allowance changes in simple terms. I have had no regrets using this firm as they are very trustworthy and honest.

They also sorted out my allocation of rental income to my partner correctly which I had been badly advised on before by a very large and well known accountancy firm.

They respond in a timely manner to queries and (politely) chase me up over submitting my tax return details. I would recommend them to anybody in the medical profession.

Dr Colm Irving, Consultant Anaesthetist

Nichols and Co have done two things for me which have changed my financial life. They advised me to incorporate my practice and introduced me to online accounting using XERO. Both these moves have saved me time, money and stress. If I do get stressed Danny Woodham is immediately available on the end of a phone or an email.

Dr Miguel Plaza, Consultant Paediatric Anaesthetist, Kings College Hospital

I have been with Nichols & Co since the beginning of my career and there is a reason for that. Not only they do their job very well, they simply care for you, because you become part of the Nichols family and this is what makes them unique. They will look after you so well, that you will never want to leave. If you want the best, you want Nichols & Co.

Dr Dimitri Amiras, Consultant

I first started using Nichols and Co in my first year of doing private consultancy work. I found them to be professional, responsive and knowledgeable. It can be quite stressful when you are faced with confusing tax and especially pension rules when you start as a consultant. However, I've always found them able to explain and guide me through the complicated process.

Dr Andrew Plumb – Consultant

I received a recommendation from a colleague for Nichols & Co over 5 years ago and have been with them ever since, initially with Debra and subsequently Danny being my accountant.

They have consistently been responsive, efficient and clear in all communications, whether via phone, email or using their secure online portals. All requests are dealt with rapidly and with a deep understanding of modern hospital medicine including private practice.

I’ve received excellent advice on all matters of taxation and expenses, practice structure, allowances and the NHS pension (including the taper and annual allowance charges). I would definitely and strongly recommend them.