There are significant tax advantages for a self-employed healthcare professional in operating via a limited company.
As a sole trader or partnership the individual is subject to income tax (at 45% for income in excess of £150K) and class 4 National Insurance. By comparison, if the individual choses the limited company route their profits are now subject to corporation tax at 20% and if remuneration is made through dividends instead of salary, there will be no NI to pay and income tax will be limited to higher rate.
Significant tax savings can soon arise.
As well as the tax savings, incorporation also provides Limited Liability, which ensures that individuals are not personally liable for all debts should the business hit trouble in the future
There are minor drawbacks. Costs are incurred to set up and administer a limited company, but normally these costs are outweighed by the tax advantages. Business property ownership, inside or outside of the company becomes a slightly more complex issue on retirement or exit from the company, impacting on capital gains and inheritance tax, but these issues are not insurmountable.
If you would like to discuss the options available to you regarding incorporation, please contact your usual Bates Weston contact or Graham Buckell, our tax director on 01332 365855 firstname.lastname@example.org
This advice is general in nature and you should take no action without consulting your professional advisor.