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TAX TIP TUESDAY: Associates Tax Status Topical Again

Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice. 

A person’s employment status helps determine their employee rights and their employer’s responsibilities. Typical employment statuses include:

  • worker
  • employee
  • director, and
  • office holder.

However, many dental associates, junior doctors, and other professionals in the dental and medical field find themselves in the fifth and final status: self-employed / contractor.

According to HMRC, self-employment is defined as a person running their business on their own, taking responsibility for the future of the company.

While it seems the future of associates being classified as such is always up for discussion, there are pros and cons to this status for both practice owners and staff.

Companies forego the 13.8 National Insurance contributions and are not required to provide any additional benefits, although some choose to do so. And the individuals they employ pay less tax and national insurance on their earnings. They also aren’t paid through PAYE, and the rights and responsibilities of employees are not applicable to them.

The review of employment status undoubtedly becomes contentious when the topic of locum cover comes up.

Locum cover is insurance intended to meet financial needs in the event a practitioner suddenly can’t work. Cover can be taken out for both individuals – to cover how much an individual would need if they were unable to work, and practices – to cover what’s needed for all the members of staff that are being insured. Currently the ‘locum clause’ places the onus of cover on dental associates and junior doctors, although they can purchase it from their practices if it is provided.

If HMRC ever does rule on any changes to employment statuses, it’s a good idea for practice owners to be prepared for all eventualities.

Consider the potential extra costs of the changes, the tax implications, the details surrounding locum cover, and the impact on the entire staff.

Ensure you have plans in place to comply with new regulations, but still maintain productivity and profit.

Contact us

If you need help assessing whether your business status can weather any potential downfall, or whether or not your personal insurance is sufficient for any unfortunate incidents, don’t hesitate to get in touch with us today.

Our financial specialists will ensure you’re covered or connect you with other like-minded specialist professionals, such as accountants and insurers who can also assist.

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