Tax planning for GPs
The tax landscape is always changing. With the personal allowance being frozen at £12,570, capital gains tax annual exemption reducing to £3,000, dividend allowance reducing to £500 and the additional rate tax band (45%) now starting from £125,140, looking at how we can mitigate the amount of tax we pay is as popular a subject as ever. One thing that’s certain is that tax is unavoidable, however, there are certain things we can do to reduce the amount of tax payable. Some of these are set out below:
- Claiming deductible expenses. For self-employed individuals, expenses must be incurred wholly and exclusively. If you’re employed, the expenses also must be necessary for you to perform your duties.
- Tax efficient investments. These include ISAs, premium bonds, EIS, SEIS, VCTs, child trust funds/junior ISAs.
- Pension contributions. You receive full tax relief on contributions, however, if you’re an active member of the NHS Pension Scheme, you’ll need to be careful of annual allowance tax charges, particularly if making contributions to a private pension scheme on top of your NHS Pension, and/or you still have an added year’s contract within the NHS Pension Scheme.
- Maximising allowances available to you. This includes personal allowance, property allowances etc.
- Planning for disposals of assets on which capital gains tax will be due.
- Business structure. Different types have different tax rules, so consider and seek professional advice to check that your business is structured in the most tax efficient way.
Tax is inevitable but the above suggestions can minimise the amount of tax payable. However, don’t make decisions for the sole purpose of saving tax and let the tax tail wag the dog!
You should always seek professional advice before making investment decisions and any options available to you so that you can reduce the amount of tax that you’re paying.
If you’d like a copy of our detailed factsheet, Tax Planning for GPs, or would like to discuss your tax planning in more detail, please feel free to get in touch with your usual Larking Gowen contact or look for contact details in the Our People section of the our website. Alternatively, call 0330 024 0888 or email firstname.lastname@example.org.
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