This document discusses various tax strategies for locum GPs, including: 1. Maximizing personal allowances and tax-efficient investments like pensions and ISAs. Taking a low salary and the rest as dividends from a limited company can reduce taxes compared to being a sole trader. 2. Employer-supported childcare or the Tax-Free Childcare scheme can help with childcare costs. Case studies show the tax savings from these options. 3. When earnings exceed £100k, the personal allowance is reduced, requiring self-assessment tax returns. Strategies like pension contributions and charitable donations can help protect the personal allowance. 4. Withdrawing money from a limited company in tax-

1. CREATING WEALTH FROM TAX:
FOR GPS
Hannah Xu Xceptional Consultancy
Dr Surina Chibber My Locum Manager

2. ABOUT US AT MY LOCUM MANAGER

3. Make the most of today...
Q&A
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5. CONTENT
• The universal rules about tax
• Maximizing Allowances
• Saving money on childcare
• Sole trader vs limited company
• When it is worthwhile to register a limited
company for locum GPs
• How to withdraw money from business tax
efficient ways
• Tax reduction strategies for £100k plus
earners
• Q&A

6. CASH FLOW QUADRANT (RICH DAD
POOR DAD)
E
Employee
40%
B
Business owners
19%
S
Self-employed
50%
I
Investors
0%

7. Personal income
allowance
• Personal earned income
£11,850 (reduction when
income exceeding £100k)
• Tax free dividend £2,000
• Rent out a spare room of up
to £7,500
• Ad hoc trading and property
income up to £1,000
• Capital gains allowance
(annual exemption) £11,700
Tax-efficient investment
allowance
• Pension annual allowance
£40,000 (reduced when
income exceeding £150,000)
• ISA allowance £20,000
• Venture Capital Trust allowance
£200,000
• Seed Enterprise Investment
Scheme (SEIS) £100,000
• EIS - £2m
• NB – financial advise shall be
sought if seeking for investment
advice

8. TAX EFFICIENCY & CHILDCARE
Tax free childcare
Employer supported
childcare (locum GP
who works under Ltd
company)

9. TAX FREE
CHILDCARE
For every £80 put into childcare account, the
Government top up £20 (the maximum is
£2,000)
None of the parents’ earning more than £100k
Both parents have to be working
Open to employed and self-employed

10. EMPLOYER SUPPORTED CHILDCARE
Ltd company join a
childcare scheme
Close to new joiner from 4th
Oct 2018
Employer support up to £55
per week tax free
However, how much you
can get depends on your
earnings (reduce to £28 per
week for 40% taxpayers,
and £25 per week for 45%
taxpayers)

11. EMPLOYER
SUPPORTED
CHILDCARE
How much you
can get?
Weekly
amount
Monthly
tax free
amount
Annual
maximum
tax/NI
savings
Basic rate
taxpayer
£55 £243 £933
Higher
rate
taxpayer
£28 £124 £625
Additional
rate
taxpayer
£25 £110 £620

12. CASE STUDY –
AMY THE
LOCUM GP
Works as locum GP via Ltd company (£60k p.a. income, expenses
£5k)
Taking salary from Ltd company £11,850
Corporation tax £8,199
Profit after tax £34,951 (amount can be taken as dividends)
No tax on salary
National insurance on salary £411.12 (employee’s NI)
She takes £30,000 as dividends, dividend tax £2100
Total take home £39,339
Childcare costs yearly appx £11,000

13. CASE STUDY: AMY
If her Ltd company
register for childcare
voucher
1
She gets £55 per
week childcare
voucher tax free, it is
£2,860 for the year.
2
It helps save
corporation tax £543,
national insurance
saving £343
3
The real cost for
childcare is £7254
4

14. CASE STUDY–
AMY
The childcare costs her £9,000
For every £80, the government
top up £20, annual cap for
government top up is £2,000 per
child
If she uses tax-free childcare

15. CASE STUDY –
AMY
Use online childcare cost calculator to see
what childcare helps are available to you:
https://www.gov.uk/childcare-calculator
If Amy is working as self-employed locum GP
rather than using Ltd company, the only
option is tax-free childcare (given that both
partners are working and no one has income
over £100k)
Other scenarios/considerations

16. LIMITED COMPANY VS SOLE TRADER

17. TIPS FOR GETTING THE BENEFITS
FROM LTD COMPANY
Maximising tax
deductible
expenses
Take money
from company
in tax efficient
ways
Consider your
long term vision

18. MAXIMISING TAX DEDUCTIBLE EXPENSES

19. MAXIMISING TAX DEDUCTIBLE EXPENSES

20. WHEN IT IS WORTHWHILE TO REGISTER
A LIMITED COMPANY?

21. CASE STUDY – KATE 1
• As a sole trader…
• Kate just return to work part-time as
locum and makes £36,000 in her income
in 18-19 tax year
• Her expenses are £10,000
• She makes £26,000 profit
• Personal allowance £11,850, so taxable
profit is only £14,150 (26000-11850)
• Tax rate is 20% so her tax bill is £2,830
• Class 4 National insurance is £308 (9%
for profit over £8424, and class 2 is £153
(£2.95 per week if profit is over £6025)
• Total tax/NI payable is £3,291
• As a limited company
• She withdraw salary £11,850
• Taxable profit (company) is £13,677
(consider employers NI £473)
• Employees national insurance on
salary is £411 (payroll deduction)
• Company tax at 19% is £2,599
• Available dividends is £11,078
• If Kate withdraws £10,000 as
dividends
• Tax free dividend is £2,000, and
taxable dividend is £8,000
• Dividend tax at 7.5% is £600
• Total tax/NI £4,083

22. CASE STUDY – KATE 2
• As a sole trader…
• Kate starts to work more and her
income is expected £75,000
• Her expenses are £12,000
• She makes £63,000 profit
• Taxable profit is £51,150
• She his 40% tax bracket (after
£34,500), income tax is £13,560
• Class 4 National insurance is £5,237
(9% for profit over £8424, 2% over
£46,350, and class 2 is £153 (£2.95
per week if profit is over £6025)
• Total tax/NI payable is £18,950
• As a limited company
• She withdraw salary £11,850
• Taxable profit (company) is £50,677
• Employees NI is £411
• Company tax at 19% is £9,629
• Available dividends is £41,048
• If Kate choose to only withdraw
£34,500
• Dividend tax is only £2,588
• Total tax/NI is £13,101
• Difference is £5,849

23. WHEN IT IS WORTHWHILE?
Consider the tax difference as well as the practicalities
(e.g. admin burden, costs of set up/professional fees, etc)
The higher your earnings are, the bigger difference is
Also consider other sources of income, as those will
affect your personal income bracket

24. SOLE TRADER VS
COMPANY
(WITHDRAW
MONEY)
Limited company: the money
withdraw may trigger income
tax, national insurance, or
even additional corporation
tax
Sole trader: take cash
randomly whenever needed,
as long as they can leave
enough funds aside for tax
bills

25. Salary
• May trigger tax (PAYE) and
National Insurance
• The first £11,500 tax free in
17/18, and the first £11,850
tax free in 18/19
• The first £8.164 NIC free
for 17/18, and the first
£8,424 NIC free for 18/19
• Employee vs Employers
NIC
Dividends
• The first £5,000 tax free in
17/18 and first £2,000 tax
free in 18/19 (despite the
income bracket)
• 7.5% for basic rate tax
bracket
• 32.5% for higher rate tax
bracket
• 38.1% for additional rate tax
bracket
• Dividend will not trigger NI

26. TIMING OF DIVIDENDS (AT THE END
OF TAX YEAR)
• If Kate wants to take additional
dividend, which fall into higher
rate bracket, the dividend will be
taxed at 32.5%. However, if she
defer it into the new tax year,
new tax free/lower tax allowance
will be available again

27. EMPLOYED AND RUNNING A LTD
THE SAME TIME
If Kate has £20,000 employment income in the same
year, it will not be advisable to take £11,850 as salary, as it
will straightaway trigger income tax of 20% (£2,370)
Kate still has the first £2,000 dividend tax free
She will be better off take dividends that triggers
relatively lower tax and no NIC

28. SOME OTHER TIPS TO
EXTRACT MONEY IN
TAX EFFICIENT WAYS
Company pension scheme
Childcare voucher
Employ spouse or member*
Sharing ownership of the Ltd
company with a spouse or
family member*
Setting up investment
accounts in the company
(independent financial advise
needed)

29. SUMMARY
Ltd company directors do not
subject to minimum salary rule
Low salary (the amount just cover
personal allowance) and high
dividend strategy is still tax
efficient, given that the director
does not have other income
It may be advisable for director to
take dividends only when he/she
has other income the same time

30. TAX TIPS FOR
£100K PLUS
EARNERS
Reducing personal allowance: reduce
by £1 for every £2 extra earned
E.g. Personal allowance in 18-19 will
reduce by £1,000 when the income
is £102,000. So PA is £10,850
instead of £11,850 in 18-19
No personal allowance at all when
earning £123,700

31. WHAT WILL
HAPPEN WHEN
CROSS £100K
MARK
You will need to submit
self-assessment tax
returns, even if you are an
employee
When earning more than
£150,000, you start paying
tax at 45%
Reduction on pension
annual allowance*

32. TAX STRATEGIES TO PROTECT
PERSONAL ALLOWANCE
• Pension contribution (be aware of
reduction of annual allowance and
independent financial advise shall be
sought)*
• Charitable donations
• Salary sacrifice
• Claiming expenses (employee and self-
employed)
• Cash extraction strategies (for ltd
company directors)

33. TAX EFFICIENT
INVESTMENTS
• The Government incentives for high
net worth individuals to invest in UK
small innovative businesses to boost
economy
• Investors get tax relief based on the
% of the amount invested
• These can be high risk investments
• Independent financial advise shall be
sought

34. SUMMARY
Tax strategies for £100k plus earners
Withdraw money from company in tax efficient
ways
Sole trader vs limited company
Employer supported childcare or Tax free
childcare
Allowances

35. Q&A
Surina@MyLocumManager.com
Hannah@xceptionalconsultancy.co.uk