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Private Medical Income: Incorporation or NOT?

There is a lot of "Gin and Tonic" advice flying around at present regarding whether or not GPs should be sheltering private medical income in a limited company and this subject is becoming one of the hottest topics as regards medical finance at the moment.  This is opposed to declaring such income as additional self-employed earnings on top of a G.P.'s share of partnership profits.

I must say from the outset that each individual G.P.'s circumstances and requirements are different and it follows that each case must be judged independently on its own merits.

The following matters must to be addressed before any decision can be made:

  • Is the income required to fund your lifestyle? If so, any savings are marginal.
  • What is the level of such private medical income? If private income is less than £20k the additional administration costs negate any benefit.
  • What are the implications for the G.P.'s pension where the private income is from NHS sources?  Assuming a GP earns £20k per annum for the next 10 years they could lose around £3,500 per annum from their annual pension and a tax free lump sum of 3 times that figure.
  • What are the additional costs involved with incorporation? Your accountant will certainly benefit from additional fees from the company!!
  • Is there actually a saving given the additional costs and potential loss of future pension?
  • Confidentiality may also be an issue as company information is available in the public domain.

The above questions are not an exhaustive, but they do highlight the need to take specialist advice before any decision is made and the examination of personal circumstances and requirements cannot be overstated.

If you need advice or a sounding board regarding this issue, please contact us on 0191 500 6930.

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