Medical accountants handle the tax, pension and reporting work specific to healthcare: NHS and private income kept separate, partnership or limited company structures, NHS pension annual allowance exposure, VAT on medical and non-medical services, and the year-end accounts that GP partners, consultants, locums and private clinics each need handled differently.
What medical accountants do
Healthcare is an unusual sector to account for. Income is often split between NHS contracts and private work, each treated differently. The NHS Pension Scheme interacts with personal tax in ways that can produce a charge years after the event. And the same clinician can be employed, self-employed and a company director within a single tax year.
Our healthcare work covers individual consultants, GP partnerships, locums and private clinics. The aim is the same in each case: records that keep every income stream separate, so that the tax, pension and VAT positions can be calculated at the year end rather than estimated.
GP practices and partnerships
A GP partnership brings NHS contract income, private fees and practice expenses into one set of accounts, which then feeds each partner’s personal tax return. Profit-sharing arrangements, partner drawings and the treatment of practice property all need to be reflected accurately. Changes to the partnership, such as a partner joining, retiring or reducing sessions, are best planned before they happen rather than corrected afterwards.
Accurate partnership accounts are also what make each partner’s NHS pension position calculable, which is where many of the later tax surprises start. We keep the bookkeeping and year-end accounts aligned with those deadlines.
Private consultants and locums
Consultants who combine NHS employment with private practice manage two tax positions at once: salaried income taxed at source, and self-employed or company income that is not. Both come together in the Self Assessment return, and the payments on account that follow need planning.
Locums face a further question: whether an engagement falls inside the off-payroll working rules, commonly called IR35. For work with public sector bodies, including the NHS, the engaging organisation is responsible for deciding the status, so it is worth understanding how that decision affects take-home pay before a contract is signed.
Sole trader, partnership or limited company
Choosing how to practise, whether as a sole trader, in partnership or through a limited company, is a financial decision as much as an administrative one. It affects personal liability, how profits are taxed, how pension contributions work and how easily a practice can be passed on. There is no universally correct structure. It needs modelling against actual figures before a change is made, and our start-up and incorporation support covers the setup once the decision is taken.
NHS pension and tax planning
Members of the NHS Pension Scheme can face an annual allowance tax charge when the growth in their pension benefits in a year exceeds the allowance, and higher earners may have a reduced, tapered allowance. Because pension growth is measured differently from the contributions actually paid, the charge is difficult to predict without careful records. Where a charge arises, it may be possible for the scheme to pay it and reduce future benefits instead (Scheme Pays), which carries its own long-term cost.
Planning here is not about aggressive schemes. It is about knowing the position early enough to make informed choices, alongside the wider personal tax planning that senior clinicians usually need.
VAT on medical services
Medical care provided by registered health professionals is generally exempt from VAT, but not everything a clinic supplies counts as medical care. Cosmetic treatments that are not carried out for a health purpose, reports prepared for legal or insurance purposes and some product sales can be standard-rated. A practice that makes both exempt and taxable supplies may also need to apply partial exemption rules to the VAT it reclaims. Drawing the line in the wrong place can lead to retrospective VAT bills.
Frequently asked questions
Do medical practices need a specialist accountant?
Not always, but the structures are unusual enough that general treatment can cost money. GP partnerships mix NHS contract income with private work, consultants move between employment and self-employment, and NHS pension annual allowance charges can arrive years after the event. Specialist handling is about knowing where those charges come from.
Should a private consultant work through a limited company?
It depends on income level, how much profit is retained rather than drawn, pension position and whether the work falls inside or outside IR35. There is no universally correct answer; it needs modelling against your actual figures before you incorporate.
How are NHS and private income treated differently?
NHS income typically arrives through contracts with defined terms and pension contributions deducted at source; private income does not. Keeping the two separate in your records is what makes the pension and tax positions calculable at the year end.
What expenses can a doctor claim?
Professional subscriptions, indemnity insurance, training costs tied to your current role, equipment and practice running costs are the common categories. What is allowable depends on whether you are employed, self-employed or trading through a company.
Is medical care exempt from VAT?
Medical care provided by registered health professionals is generally exempt. Cosmetic treatments without a health purpose, reports for legal or insurance purposes and some product sales can be standard-rated, so clinics offering a mix of services need to check each one.
To discuss your practice structure, pension position or year-end accounts, contact us or request a quote.
