You spent years training to look after other people. Somewhere along the way, nobody trained you to look after your own finances, and the tax position of a London medic in private work is genuinely complicated. Locum shifts, private practice income, NHS employment running alongside a limited company, indemnity costs, professional fees, pension decisions that will echo for decades. Get the structure right and you keep significantly more of what you earn. Get it wrong and you can spend years quietly overpaying HMRC without ever knowing.
Here is what every London doctor, dentist and consultant working through a limited company should have a handle on.
For medics with meaningful private or locum income, a limited company is usually the most tax efficient structure available. It lets you pay yourself through a blend of salary and dividends, claim legitimate professional expenses against Corporation Tax, retain profit inside the company for future years, and make employer pension contributions that attract tax relief.
The caveat is that the answer depends heavily on where your income comes from. Private practice and genuinely independent work suits a company well. Locum work inside the NHS is a different story because of IR35, which brings us to the question every locum asks.
Most locum engagements with NHS trusts are treated as inside IR35, meaning tax and National Insurance are deducted before your rate reaches your company and the tax advantage of the company largely disappears for that work. NHS bodies determine status themselves and they take a cautious approach, so blanket inside determinations are common.
That does not automatically make a limited company pointless for a locum. Many medics run a mix of work, with inside IR35 NHS shifts alongside genuinely independent private clinics, medicolegal reporting, teaching, media work or cosmetic practice that sits outside. The company earns its keep on the independent work, and a specialist accountant can tell you honestly whether your particular mix justifies one. Beware anyone who gives you a blanket answer either way.
Yes, and for most London consultants with an established private practice it is the single biggest tax planning decision available. Running private work through a company rather than as self employment means profits are taxed at Corporation Tax rates rather than top personal rates, income can be drawn flexibly as dividends when you actually need it, a spouse who genuinely works in the practice can be remunerated appropriately, and surplus profit can fund company pension contributions or be retained for the future.
The timing of incorporation, the treatment of existing private practice goodwill and the interaction with your NHS employment all need proper advice. This is exactly the kind of decision to make once, correctly, with a specialist.
A medic operating through a limited company can claim professional indemnity insurance, GMC, GDC or other regulator fees, royal college and professional body subscriptions, exam and course fees for work related training, medical equipment, travel between work sites, use of home as office for admin and reporting, accountancy fees, and pension contributions made by the company.
Two things catch medics out. First, expenses need to relate to the company's work, so costs tied purely to your NHS employment sit differently from costs of your private practice. Second, most medics underclaim rather than overclaim, particularly on training, subscriptions and home working. A proper review in your first year with a specialist almost always finds money left on the table.
Mostly, yes. Medical services provided for the protection, maintenance or restoration of health are exempt from VAT, which is why most doctors never think about it. The trap is that not everything a medic bills is exempt. Purely cosmetic procedures, medicolegal reports prepared for litigation rather than patient care, and some occupational health work can be standard rated. A busy practice mixing exempt and taxable work can drift over the VAT registration threshold without realising, and finding that out during an HMRC enquiry is the expensive way to learn it.
If your practice includes cosmetic or medicolegal work, this is worth reviewing properly rather than assuming.
Income drawn through your own limited company does not build NHS pension benefits, and this is one of the most important tradeoffs in medical tax planning. The NHS pension remains one of the most valuable retirement schemes in the country, so decisions about how much work to move into a company should always account for the pension picture, including annual allowance implications for high earning medics.
The good news is that a company opens its own pension planning route, as employer contributions into a personal pension attract Corporation Tax relief without triggering personal tax. For many consultants the right answer is a blend, protecting NHS pension accrual on employed work while using company contributions to build additional retirement savings tax efficiently. This is a decision worth modelling properly with an accountant who understands both sides.
We work exclusively with limited companies, and medical is one of our core sectors. We support locum doctors, hospital consultants, GPs, dentists and other clinicians across London and the UK with company formation and structure advice, Corporation Tax and annual accounts, salary and dividend planning, IR35 reviews, VAT advice for mixed practices, pension planning alongside NHS scheme membership, and Self Assessment.
Find out more on our Medical page, or learn about working with us in the capital on our Accountants in London page.
Talk to a medical specialist at Pulse. Whether you are a locum weighing up a limited company, a consultant thinking about incorporating private practice or an established medic who suspects they are overpaying, the first conversation is free, friendly and entirely without obligation.
Is it worth a locum doctor having a limited company?
It depends on your mix of work. NHS locum shifts are usually inside IR35, but medics with genuine private, medicolegal or independent clinic income often benefit significantly from a company. A specialist review of your actual work mix gives the honest answer.
Can doctors claim GMC fees and indemnity insurance?
Yes, regulator fees, professional indemnity insurance and professional body subscriptions are legitimate expenses when they relate to the work your company carries out.
Do private doctors charge VAT?
Services for the protection, maintenance or restoration of health are VAT exempt. Cosmetic procedures and some medicolegal work can be taxable, so mixed practices should review their position.
Can my spouse be paid by my medical limited company?
A spouse who genuinely works in the practice, for example handling admin, billing or practice management, can be remunerated appropriately for that work. The arrangement must reflect reality, so take advice before setting it up.