As private practice income grows, many NHS consultants begin asking whether operating through a limited company could offer advantages over their current structure.
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This article was approved by Best Practice IFA Group Limited on 29 June 2026.
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What may have started as a small amount of private work alongside an NHS consultant role can gradually become a meaningful part of overall earnings. At that stage, questions often begin to arise. Should the income continue to be treated as self-employed income, or would a limited company be more appropriate? Could there be tax, administrative or wider planning advantages to changing the structure?
These are questions we regularly hear from consultants who are building private income alongside their NHS commitments. While tax is often the first consideration, it is rarely the only one. Flexibility, administration, liability, pension considerations and long-term financial planning can all influence which structure is most suitable.
There is no one-size-fits-all answer. What works well for one consultant may be entirely unsuitable for another, particularly where income levels, personal circumstances and future plans differ.
In this article, we explore some of the key considerations NHS consultants should review when deciding whether self-employment or a limited company is the most appropriate structure for their private practice income.
Self-Employment vs Limited Company for NHS Consultants
Before looking at the detail, the table below provides a simple comparison of the two structures.
At first glance, the choice can appear straightforward. However, the most suitable structure depends on far more than tax alone.x
How much private practice income you earn, how much you need personally, your future plans and your wider financial circumstances can all influence which option is most appropriate.
Why NHS Consultants Consider a Limited Company as Private Practice Income Grows
For many consultants, private practice begins relatively simply.
Income is earned personally, expenses are claimed and everything is reported through Self Assessment. At this stage, self-employment is often the most straightforward and practical option.
As private practice grows, however, the conversation can start to change.
Colleagues may be discussing limited companies. An accountant may suggest reviewing your structure. You may simply begin to wonder whether your current arrangements are still the most appropriate for your circumstances.
This does not necessarily mean anything is wrong.
In many cases, the real issue is not that the original decision was incorrect. It’s that the decision was made years ago and has never been reviewed as income and circumstances have evolved.
The £100,000 Tax Threshold and Private Practice Income
One of the most common reasons consultants begin reviewing their structure is because of what happens when total income exceeds £100,000.
Consider a consultant earning £100,000 through their NHS role who then generates an additional £30,000 from private practice.
Many assume that any additional income is simply taxed at the higher rate.
However, once income exceeds £100,000, the personal allowance begins to be withdrawn. For every £2 earned above £100,000, £1 of personal allowance is lost. By the time income reaches £125,140, the personal allowance has been fully removed.
This creates what is commonly known as the “60% tax trap”, where the effective marginal rate of tax can be significantly higher than many consultants expect.
This does not automatically mean a limited company is the answer.
However, it is often the point where consultants begin asking more strategic questions about how private practice income fits into their wider financial picture and whether a limited company could provide greater flexibility moving forward. For many consultants, this is also when broader tax planning considerations become increasingly important.
Example: An NHS Consultant with Growing Private Practice Income
A consultant earning:
- £100,000 from their NHS role
- £30,000 from private practice
has a total income of £130,000.
At this level, their personal allowance is fully withdrawn and income falling within the £100,000 to £125,140 band can be subject to an effective marginal tax rate of approximately 60%.
Operating as a Self-Employed Medical Consultant
For many NHS consultants, self-employment remains an entirely appropriate structure.
It is straightforward to operate, involves fewer compliance obligations and generally carries lower administration costs than running a limited company.
Benefits of Self-Employment
- Simple to set up and operate
- Lower compliance requirements
- Fewer filing obligations
- Direct access to profits
- Straightforward reporting through Self Assessment
Potential Drawbacks as Income Increases
As private practice income grows, self-employment can become less attractive from a planning perspective.
Profits are generally taxed personally in the year they are earned, regardless of whether all of that money is needed immediately.
For consultants who are already higher-rate or additional-rate taxpayers, this can limit flexibility and increase the importance of reviewing whether the existing structure remains appropriate.
When Should NHS Consultants Consider a Limited Company?
There is no specific income level at which every consultant should move to a limited company.
However, there are situations where the conversation becomes increasingly relevant.
A limited company is a separate legal entity that receives income and pays corporation tax on its profits. Depending on individual circumstances, this can provide greater flexibility around how and when profits are extracted.
Situations Where a Limited Company May Be Worth Exploring
- Private practice income is increasing year-on-year
- Not all profits are required personally
- Greater flexibility is needed around income extraction
- Total income is approaching key tax thresholds
- Long-term retirement or investment planning is becoming a priority
- Private practice has become a significant part of overall earnings
Why a Limited Company Isn’t Always the Right Answer
A limited company does not automatically mean lower tax.
Nor does it automatically mean more money in your pocket.
Running a company comes with additional responsibilities, including annual accounts, corporation tax returns, Companies House filings and ongoing compliance obligations.
For some consultants, the benefits outweigh these additional requirements.
For others, self-employment remains the most practical solution.
Common Mistakes NHS Consultants Make When Choosing a Business Structure
One of the biggest mistakes is focusing solely on tax.
While tax is important, it is rarely the only factor that matters.
In our experience, the most common mistake is not reviewing the structure at all.
Many consultants begin private practice on a self-employed basis and simply continue operating that way for years without ever reviewing whether a limited company may have become appropriate as their circumstances changed.
A better question to ask is not:
“Which structure is best?”
But rather:
“Is my current structure still appropriate?”
That shift in thinking often leads to a far more productive discussion.
Why Limited Company Advice for Consultants Should Be Specialist
Business structure decisions should never be viewed in isolation.
For NHS consultants, private practice income often sits alongside NHS earnings, NHS pension considerations, family circumstances and wider financial planning objectives.
Advice that may be entirely suitable for another type of business owner may not be appropriate for a medical consultant whose circumstances are considerably more complex.
This is why specialist advice can be so valuable.
Where questions arise around business structure, private practice income or whether a limited company is appropriate, many NHS consultants choose to work with Nichols Medical Accountants who specialise in supporting doctors, NHS consultants and healthcare professionals.
A review of your current arrangements can help determine whether your existing structure remains appropriate and identify opportunities that may not previously have been considered.
Self-Employment or Limited Company: Which Is Right for You?
There is no universal answer.
The right structure depends on your income, personal circumstances, future plans and how private practice fits into your wider financial picture.
What worked perfectly when private practice generated £10,000 per year may not be the most appropriate solution when that figure reaches £30,000, £50,000 or significantly more.
For some consultants, a review will confirm that their current arrangements remain entirely appropriate.
For others, it may highlight opportunities worth exploring further.
The important thing is not whether you are self-employed or operating through a limited company.
The important thing is ensuring your structure still supports where your private practice is today.
Dental and Medical Financial Services recommend seeking tailored guidance from experts such as Nichols Medical Accountants, who specialise in medical tax planning and compliance.
Disclaimer: This article has been prepared by Dental & Medical Financial Services, with insights from Nichols Medical Accountants. This article is for general information only and does not constitute financial, tax or accountancy advice. Professional advice should always be sought based on your individual circumstances.
