Get financially fit for the months ahead

There is no question about the extent of demand for private medical treatment, but juggling the needs of the NHS and private sector will be a significant challenge for some time. 

Most private practices have been significantly affected by the impact of Covid-19, so it is important that when the capacity to carry out private work restores, you are financially well placed to adapt to a new environment. Ian Tongue looks at some of the areas you should be considering in order to be financially fit for the year to come

Look at your trading structure

This is often the decision that yields the greatest tax savings, but also provides a great deal of financial flexibility. 

There was a significant shift in recent years to using limited companies for private practices to help mitigate pension annual allowance charges and provide other strategies if you don’t require all of the money generated by the private practice.

For those trading as self-employed or in partnership with a financial year-end that is coterminous with the tax year end – that is to say, 5 April/31 March – there are usually few barriers to switching trading structure. 

If you have a financial year-end for your private practice that is not coterminous with the financial year-end, an acceleration of tax liabilities can occur with the switch and this can be a barrier, depending on your financial circumstances.

For those who have considered switching to a company but ruled this out on the basis of accelerated tax liabilities, now is the time to reconsider matters, as the tax effect of changing structure is likely to be less due to the impact of Covid on private practices.  

Consider your defence cover