Great video Tommy and Jenny simplifying a very complicated subject. Another important point to make I think is that if you choose to leave your profits in a Limited company for the long term for marginal if any tax gains there is a lost opportunity cost to pay in terms of it losing value steadily with inflation rather than compounding in an index fund ISA if only you had taken it out. Thanks again I’ll be sticking with being a sole trader.
👍 Good point - we love S&S ISAs although it is possible to invest via Ltd company. We have a podcast on it. Also super deductions are useful right now if you need to buy equipment, like podcast microphones😉
Hi Tommy. Another very useful episode. Thanks to you and the guest. Can I clarify something about the 'sole trader' scenario. Are the calculations based on an individual who is full time in the NHS and is the sole trader their side hustle ? So, can the sole trade (side hustle) have a separate personal allowance from their NHS PAYE personal allowance ? Or is the personal allowance a total allowance for the NHS PAYE income and the side hustle as a locum or private practice venture ? Many thanks.
@@drtommyperkins9000 Yup a reminder about completing type 2 pension forms sounds helpful. Any advice re: protecting ourselves from inflation such as better budgeting, investment ISAs/LISAs, additional NHS pension purchases, using low-interest debt (e.g. mortgage) as a hedge etc. would probably help me and a lot of my colleagues out there. Appreciate you've covered a lot of these topics already.
Thanks. What about Consultants who have a limited company for their private income? They are likely to already be above £100,000 income for their NHS work alone, so does it still make sense to have a limited company for their PP work ? Would we now be better to either go back to being a sole trader or pay ourselves a salary from the company from April 23?
A limited company is an excellent vehicle for people who can live off a minimal salary but have a business to grow . The taxation set up gives every encouragement to investing in a business and its growth and penalises one who wants to use the ltd company as a vehicle for extracting a lower tax salary . Unless you’re earning cash and can hide it you will always pay tax and NI one way or other and it balances out. However a ltd company allows you to invest in a business and write off against expenses . For a business minded person this is the best way to proceed
👍 super deductions at the moment as well - useful if you need to buy some equipment for making UA-cam videos. 😉More details here www.medicsmoney.co.uk/ep-66-the-pros-and-cons-of-a-limited-company/
Great talk and very informative. I am a full time locum GP (self employed). I wonder what does PAYMENT ON ACCOUNT means? I was looking for some advise about it and what I know is that its £5000 we need to pay yearly on top of tax/ pensions/ NI? thank you
Hello, thanks for the question. The Payment on Account (POA) system is the way in which HMRC collect taxation for individuals who have less than 80% of their income collected at source (for example income tax on salaries is collected at source via the PAYE system). Self employed locums will earn taxable profits and tax will not have been collected at source so they, and yourself, will fall under the POA scheme. This basically means that HMRC will start to try and collect their tax in advance after the first year. Imagine you start as a locum and for the first tax year you owe £5000 in tax and NIC - the payment will be due on 31 January and you will pay this BUT HMRC will then ask for a payment on account towards your next tax year - they will ask you to pay another 50% on top of what you pay (i.e. £2,500) that January and again in July. Then the following January they will take this off the amount you actually owe and the cycle starts again. Hope that makes some sense!
We have a YT video on Ltd companies for doctors that covers Ir35. Needs careful consideration as not always the tax saving panacea they are made out to be.
👋 the principles apply to many different doctors. Locums are unfortunately often encouraged to use Ltd companies by unscrupulous advisers. A Ltd company can make a lot of sense but it can also make no sense. Hopefully we made that point clearly.
Hi, great video. Can I clarify the point about the marginal rate corporation tax for income between 50,000 - 250,000, not sure where this 26.50% came from!? my understanding was that corporation tax will be either 19% for income below 50,000 and 25% for income above 250,000. anything in the middle will be at a marginal rate but it was not clear at what %. I thought and hoped this is going to be less than 25%. Is the 26.50% corporation is official % of corporation for any income between 50,000 and 250,000?
Hi Hisham, thanks for the question. The 26.50% is not an official corporation tax rate between the £250,000 and £50,000 but when you look at the numbers for profits between these two limits the marginal rate (that is the tax rate on earning an extra pound) turns out to be 26.50%. It a bit like if an individual has a salary of between £100,000 and £125,140 their marginal tax rate will be 60% even though this isn't an official rate of income tax.
Too complex. Remove Co. Costs then NI salary then PENSION payment = what is left is the profit for DIVIDENDS. Plus register for VAT to claim back VAT on purchases
Great interview! I am a GP partner earning more than £125,000 so I have lost my tax free amount. I own some buy to let properties with my partner however they are in my name only, looking back we should’ve put these into a limited company from the offset but unfortunately didn’t think of that at the time. We have research putting the properties into a limited company however this would mean the company would have to buy the property from myself therefore I would have to pay capital gains tax on the sale and the company would have to pay stamp duty so it really does not look to be worth it. Moving forward we are looking to buy more buy to let properties and wonder if this would be better to do as a limited company with my partner owning 90% shares as he is a lower rate tax payer. And even down the line put expenses through the company such as mobile phones and a lease electric car. I just wonder what your thoughts are on this?
can we have a download link for the spreadsheet calculator please?
Hello
I am pleased to get so much information in this video , any updates about same topic in 2024
Great video Tommy and Jenny simplifying a very complicated subject. Another important point to make I think is that if you choose to leave your profits in a Limited company for the long term for marginal if any tax gains there is a lost opportunity cost to pay in terms of it losing value steadily with inflation rather than compounding in an index fund ISA if only you had taken it out. Thanks again I’ll be sticking with being a sole trader.
👍 Good point - we love S&S ISAs although it is possible to invest via Ltd company. We have a podcast on it. Also super deductions are useful right now if you need to buy equipment, like podcast microphones😉
I don’t think offsetting expenses against your limited company were covered properly.
Hi Tommy. Another very useful episode. Thanks to you and the guest. Can I clarify something about the 'sole trader' scenario. Are the calculations based on an individual who is full time in the NHS and is the sole trader their side hustle ? So, can the sole trade (side hustle) have a separate personal allowance from their NHS PAYE personal allowance ? Or is the personal allowance a total allowance for the NHS PAYE income and the side hustle as a locum or private practice venture ? Many thanks.
Personal allowance is total for income ☹️But plenty of other allowances eg dividend allowance
If the dividends are given to a non-earning adult family member, upto the persona; allowance limit, then there is no tax to pay?
Great :)
Where can I find info about the shareholder structure and why my spouse cannot have 90% of the shares.
I am following now that I found you :)
Salaried GP here. Great overview! Thanks Tommy Perkins and Jenny Stone 🙂
You’re most welcome. Let us know if there’s any topics you’d like us to cover. Type 2 pension forms is a big thing for salaried GPs
@@drtommyperkins9000 Yup a reminder about completing type 2 pension forms sounds helpful. Any advice re: protecting ourselves from inflation such as better budgeting, investment ISAs/LISAs, additional NHS pension purchases, using low-interest debt (e.g. mortgage) as a hedge etc. would probably help me and a lot of my colleagues out there. Appreciate you've covered a lot of these topics already.
Thanks. What about Consultants who have a limited company for their private income? They are likely to already be above £100,000 income for their NHS work alone, so does it still make sense to have a limited company for their PP work ? Would we now be better to either go back to being a sole trader or pay ourselves a salary from the company from
April 23?
Certainly that’s one scenario where it can make sense. As we said in the video it really depends on your personal circumstances.
A limited company is an excellent vehicle for people who can live off a minimal salary but have a business to grow . The taxation set up gives every encouragement to investing in a business and its growth and penalises one who wants to use the ltd company as a vehicle for extracting a lower tax salary .
Unless you’re earning cash and can hide it you will always pay tax and NI one way or other and it balances out. However a ltd company allows you to invest in a business and write off against expenses . For a business minded person this is the best way to proceed
👍 super deductions at the moment as well - useful if you need to buy some equipment for making UA-cam videos. 😉More details here www.medicsmoney.co.uk/ep-66-the-pros-and-cons-of-a-limited-company/
Great talk and very informative. I am a full time locum GP (self employed). I wonder what does PAYMENT ON ACCOUNT means? I was looking for some advise about it and what I know is that its £5000 we need to pay yearly on top of tax/ pensions/ NI? thank you
Hello, thanks for the question. The Payment on Account (POA) system is the way in which HMRC collect taxation for individuals who have less than 80% of their income collected at source (for example income tax on salaries is collected at source via the PAYE system). Self employed locums will earn taxable profits and tax will not have been collected at source so they, and yourself, will fall under the POA scheme. This basically means that HMRC will start to try and collect their tax in advance after the first year. Imagine you start as a locum and for the first tax year you owe £5000 in tax and NIC - the payment will be due on 31 January and you will pay this BUT HMRC will then ask for a payment on account towards your next tax year - they will ask you to pay another 50% on top of what you pay (i.e. £2,500) that January and again in July. Then the following January they will take this off the amount you actually owe and the cycle starts again. Hope that makes some sense!
@@MedicsMoney thank you so much
@@mak9658 This weeks podcast(released tomorrow) is just for GP Locums - link.chtbl.com/MedicsMoneypod
Can you explain IR35 and locumming as an F3? Can I set a Ltd company up and put all my locum earnings in there?
We have a YT video on Ltd companies for doctors that covers Ir35. Needs careful consideration as not always the tax saving panacea they are made out to be.
where is the link to buy an electric car from the company?
This doesn’t apply to F3 locum doctors in SHO hospital posts right? Only GP locums or Consultant private practice correct?
👋 the principles apply to many different doctors. Locums are unfortunately often encouraged to use Ltd companies by unscrupulous advisers. A Ltd company can make a lot of sense but it can also make no sense. Hopefully we made that point clearly.
Hi, great video. Can I clarify the point about the marginal rate corporation tax for income between 50,000 - 250,000, not sure where this 26.50% came from!? my understanding was that corporation tax will be either 19% for income below 50,000 and 25% for income above 250,000. anything in the middle will be at a marginal rate but it was not clear at what %. I thought and hoped this is going to be less than 25%. Is the 26.50% corporation is official % of corporation for any income between 50,000 and 250,000?
Hi Hisham, thanks for the question. The 26.50% is not an official corporation tax rate between the £250,000 and £50,000 but when you look at the numbers for profits between these two limits the marginal rate (that is the tax rate on earning an extra pound) turns out to be 26.50%. It a bit like if an individual has a salary of between £100,000 and £125,140 their marginal tax rate will be 60% even though this isn't an official rate of income tax.
How much does the nhs as an employer contribute to my pension I'm in the 40 percent tax bracket
We've made a video to answer your question here
ua-cam.com/video/LlGH8kxRSV8/v-deo.htmlsi=QHeTHbloBrq9XbMR
Hope it helps
Too complex. Remove Co. Costs then NI salary then PENSION payment = what is left is the profit for DIVIDENDS. Plus register for VAT to claim back VAT on purchases
I dont think the limited company expenses are covered fully.
Great interview!
I am a GP partner earning more than £125,000 so I have lost my tax free amount. I own some buy to let properties with my partner however they are in my name only, looking back we should’ve put these into a limited company from the offset but unfortunately didn’t think of that at the time. We have research putting the properties into a limited company however this would mean the company would have to buy the property from myself therefore I would have to pay capital gains tax on the sale and the company would have to pay stamp duty so it really does not look to be worth it. Moving forward we are looking to buy more buy to let properties and wonder if this would be better to do as a limited company with my partner owning 90% shares as he is a lower rate tax payer. And even down the line put expenses through the company such as mobile phones and a lease electric car.
I just wonder what your thoughts are on this?
Yes we have an article and podcast on this
www.medicsmoney.co.uk/should-you-use-a-ltd-company-for-your-buy-to-let-property-business/
Hope it helps?
How many of your watchers do you think are earning 100k+...?
I bet probably non!