www.independent-practitioner-today.co.uk
February 2021 Issue 129
INDEPENDENT PRACTITIONER TODAY
The business journal for doctors in private practice
In this issue
Beauty treatments are still cutting it
Latest research examines the cosmetic procedures market P12
A rare possibility to save thousands of pounds in tax is beckoning as independent practitioners consider the future for themselves and their businesses. Those who use a limited company for private work and have built up cash in the bank may have a very short window of opportunity to extract this at a 10% capital gains tax rate before being prevented by Chancellor Rishi Sunak. With the Budget fast approaching – on 3 March – some accountants fear that the tax rate could then rise from 10% to up to a whacking 38.1% dividend tax rate. The way out could be through a type of liquidation and is likely to prove an attractive option for fastacting consultants and GPs with a private practice who have recently retired from their independent work or are considering doing so. Savings for some could amount to well over £100,000, accountants say. There is always speculation that capital gains tax (CGT) rates will rise in the lead-up to almost every Budget, so what is new? James Gransby, a partner at RSM Tax and Accounting Ltd in London, In association with
In this issue
Be a flexible working winner!
Jane Braithwaite shows what’s needed to manage a remote team and reap the benefits of a flexible working policy n p20
How to find the best computer system Starting out is a balancing act We show you the dos and don’ts of gettting the best from a practice mangement system P28
Deadline to a big tax saving? By Robin Stride
£12.50
told Independent Practitioner Today: ‘Well, this time, it looks more likely, given the need to raise taxes and, in fact, Mr Sunak commissioned a report in July 2020 from the Office of Tax Simplification to see whether current CGT rules were fit for purpose. ‘When released in November 2020, the report said that “more closely aligning capital gains tax rates with income tax rates has the potential to raise a substantial amount of tax for the Exchequer”.’ He believes this would be an easy win for the Chancellor, considering that less than 1% of the population pay CGT. But, for those that do, the figures can be large. Access to the 10% rate of tax would mean dissolving your company via what is known as a Members Voluntary Liquidation (MVL). Mr Gransby said: ‘This may sound scary – because of the word liquidation – but it is a routine way of closing down a company at the end of its life. ‘When using the MVL route, the money is extracted as “capital” rather than “income”, which can then give access to the 10% tax rate if certain criteria are met.’ Rules around dissolving one
What you need to know to stay within the law when setting up a business P34
Accountant James Gransby company and starting up a new one, known as ‘phoenixing’, were tightened up only a few years ago. But Mr Gransby said those who had recently ceased private work or were planning to retire in the near future or who have built up six-figure sums of cash may wish to think Xxxxx about this now before tax rates rise. He stressed: ‘MVLs are not the right option for everyone, but
there will be people reading this for whom it is the right option and, if this is you, then there may only be a few weeks to act. ‘To ensure you meet the criteria, you need to speak to an accountant and appoint a liquidator. ‘If somebody has £700k in their company and wants to get it at 10%, they might decide to accelerate retirement plans to make sure they aren’t caught by a tax trap. The worst case scenario could be to decide not to retire yet, wait six months and then get caught.’ He said the Covid crisis might make people think about their work life balance and accelerate retirement plans in some cases. n See calculations on page 5