I’d like to set out some of the pro’s and con’s so that GPs can make more of an informed decision on this very important matter.Do not just assume that using a limited company will save lots of tax! In many circumstances it can, in others it can be extremely costly. There is no general rule of thumb which will point directly to a company or not as the best course of action; it’s necessary to look at the figures and your personal situation.
Things to consider
Do you wish to continue to contribute to the NHS pension scheme – and if you want to opt out, have you taken proper professional advice about this so you fully understand what you are giving up? You cannot put locum work through a limited company and still pension that income. Putting any entity between you and the practice will prevent you from contributing for that source of income.
If you’re happy to leave the NHS pension scheme then:
What do you expect your gross fees to be on an annual basis? If you are likely to exceed the VAT turnover limit, there could be an argument that your company is providing staff (on which you would have to charge VAT) rather than providing healthcare itself (which would be exempt). If you have to add 20% to your fees, which you would pay over to HMRC, then you are either going to earn less or charge your practices more, which may not be acceptable.