Accountants for Hospital Consultants

ACCOUNTANTS FOR HOSPITAL CONSULTANTS

Specialist accountants for NHS consultants, private practice and medico-legal work.

A consultant’s finances usually have three moving parts pulling against each other: an NHS salary taxed at source, a private practice that is not, and an NHS pension quietly accruing value fast enough to generate an annual allowance charge. Optimise any one of them in isolation and you will usually make one of the other two worse.

TaxDigit act for hospital consultants across the UK. We look at the whole position — salary, private income, pension and structure — and plan around it rather than around whichever bill arrived most recently.

What consultants come to us for

• Private practice accounts — sole trader, limited company or group practice, set up and run properly.
• Annual allowance charges — calculated, checked against carry forward, and paid the cheapest lawful way.
• The 60% band — planning around the withdrawal of the personal allowance between £100,000 and £125,140.
• Incorporation — whether a company genuinely helps, given how much you need to draw.
• Medico-legal and reporting work — including its VAT treatment, which is not the same as clinical care.

Private practice: how to hold it

Sole trader

Simplest to run and often right in the early years of a private list. Profits are added to your NHS salary and taxed at your marginal rate, so once private profits push you through £100,000 the effective rate on that slice reaches 60% before National Insurance.

Limited company

Profits are taxed at corporation tax rates — 19% small profits, 25% main rate, marginal relief between £50,000 and £250,000, with those limits divided by the number of associated companies. A company only helps if you can genuinely leave profit inside it; if you need to draw everything each year, dividend tax usually erases the advantage. It is a decision that should follow a forecast of what you will actually spend, not a general preference.

Group practice or partnership

Where consultants share facilities, staff or a billing operation. The accounts, the profit-sharing agreement and each member’s personal position all need to line up, and they frequently do not.

The NHS pension problem for consultants

The annual allowance caps tax-free pension growth at £60,000 for 2026/27, tapered by £1 for every £2 of adjusted income above £260,000 where threshold income also exceeds £200,000, down to a floor of £10,000. In a defined benefit scheme the measure is the growth in your promised pension, not what you contributed — so a merit award, a pay uplift or a change in pensionable pay can create a large input amount and a tax charge in a year when your take-home pay barely moved.

Unused allowance from the previous three tax years can be carried forward, provided you were a scheme member in those years. Where a charge remains, and your total annual allowance charge for the year exceeds £2,000 and the pension input amount in the scheme exceeds the standard annual allowance, you can require the scheme to pay it in return for a reduction in benefits. The NHS scheme also offers a voluntary route in other cases. We set out the cost of each option in pounds rather than in principle. More on annual allowance and scheme pays.

Consultants affected by the McCloud remedy may also receive a Remediable Pension Savings Statement, which can revise annual allowance positions for earlier years. These need to be worked through rather than filed.

Medico-legal work, reports and VAT

Clinical care is exempt from VAT where a registered health professional acts within their profession and the primary purpose is protecting, maintaining or restoring health. Work whose primary purpose is something else — a report prepared for litigation, for an insurer or for an employer’s decision rather than for the patient’s treatment — will not necessarily meet that test, and can be taxable. Once taxable income approaches the £90,000 registration threshold, VAT registration becomes a live question. This is a genuinely fact-sensitive area and worth a proper review if you do a meaningful volume of reporting work.

Everything else we handle

• Self assessment returns bringing NHS employment, private profits, dividends, pension charges and property income together.
• Annual accounts, corporation tax returns and company secretarial work for private practice companies.
• Billing records and cloud bookkeeping, including reconciling insurer and self-pay receipts.
• Payroll for practice staff, and remuneration planning for a genuinely engaged spouse — on a commercial basis for real work, because arrangements that do not reflect reality attract challenge.
• Making Tax Digital for Income Tax readiness — from April 2026 above £50,000 of qualifying income, April 2027 above £30,000, April 2028 above £20,000.
• Retirement and succession planning for the practice, and support if HMRC opens a compliance check.

Why consultants choose TaxDigit

• Chartered certified accountants who deal with NHS pension arithmetic routinely, not occasionally.
• Advice that treats salary, private practice and pension as one problem.
• Fixed fees agreed before work starts, with year-round access.
• Guildford-based, acting for consultants in Surrey, London and across the UK.

Frequently asked questions

Should I run my private practice through a limited company?

Only if you can leave profit in the company. The corporation tax rate is lower than your marginal income tax rate, but extracting the money as dividends closes most of the gap. Consultants who need to draw everything each year usually find a company costs more than it saves once accounts, filings and payroll are added. It is an arithmetic question, and we will show you the arithmetic.

Why have I received an annual allowance charge when my pay barely changed?

Because in a defined benefit scheme the annual allowance measures the growth in the value of your promised pension, not your contributions. A merit award, a pensionable pay increase or a change in scheme membership can increase that value sharply in a single year while your monthly pay looks much the same.

Should I use scheme pays or pay the charge myself?

Scheme pays avoids an immediate cash cost but permanently reduces your pension, and the scheme applies a factor to the amount. Paying personally preserves the pension but takes the money now. The right answer depends on your age, the size of the charge and what else the money would do. We quantify both.

What is the deadline for a scheme pays election?

For a mandatory election, 31 July in the year following the year in which the tax year ends — so for 2025/26 that is 31 July 2027. The NHS scheme’s voluntary route works to the same date. A revised pension savings statement issued late can extend it. It is worth diarising, because the election cannot usually be made afterwards.

Is my medico-legal income exempt from VAT?

Not necessarily. The exemption turns on whether the primary purpose of the service is protecting, maintaining or restoring health. A report produced for litigation or for an insurer’s decision may not meet that test even though a doctor produced it. If you do a significant amount of reporting work, the position is worth reviewing against the registration threshold.

Can I pay my spouse from my private practice?

You can pay a spouse for work genuinely done, at a commercial rate, like any other employee — and it must be documented and actually paid. Arrangements that do not reflect real work, or that are really an attempt to divert income, are challenged by HMRC and are not something we will put our name to.

What is the 60% tax band and can I avoid it?

Between £100,000 and £125,140 of adjusted net income the personal allowance is withdrawn at £1 for every £2, which produces an effective marginal rate of 60% on that slice for taxpayers in England, Wales and Northern Ireland. Pension contributions and gift aid reduce adjusted net income, so there are legitimate levers — but for many consultants further pension saving collides with the annual allowance, which is exactly why the two have to be planned together.

I am about to start private practice. What should I do first?

Before the first invoice: decide the structure, register with HMRC on the right basis, set up a separate bank account and a billing record from day one, and get indemnity in place for the private work. Retrofitting records after eighteen months of practice is the single most expensive thing we are asked to do.

Do you act for consultants outside Surrey?

Yes. We are based in Guildford and act for consultants across the UK, working by video, phone and secure portal.

Information correct as at 12 August 2026. This page is general information about UK tax, VAT and NHS pension rules and is not advice for any particular person; tax depends on individual circumstances and the rules change. Please speak to us before acting on anything you read here.