Doctors and dentists ― introduction

Produced by Tolley

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Doctors and dentists ― introduction
  • Overview
  • Doctors
  • Dentists

Doctors and dentists ― introduction


These guidance notes concern tax issues around general medical practitioners (GMPs) and general dental practitioners (GDPs). Doctors are also referred to as GPs. In these notes, these individuals are collectively referred to as ‘practitioners’. Note that this is distinct from the wider term ‘medical professional’, which encompasses nurses, physiotherapists, hygienists, etc.

The tax affairs of doctors and dentists has become a niche specialism for some accountants and tax advisers. This makes sense in many respects, as medical professionals will come across similar issues. However, disregarding VAT for the moment, there are no specific references in legislation regarding the subject. For guidance on VAT aspects, see the Doctors and dentists guidance note.

There are specific issues concerning the preparation of accounts for medical practices. Accounts are used by the Review Board for determining pay awards, so a higher degree of accuracy is required than if you were preparing accounts only for tax purposes. These issues are beyond the scope of these notes but include not netting off income and expenses, correctly recognising debtors, pension contributions and allocating profits. More details can be found on the ICAEW’s website under Accounting for the healthcare professional.

What makes the tax affairs of practitioners unique, is historic practice regarding the employment and remuneration of doctors and dentists. However, none of these practices are unique to the medical profession, they just happen to be more prevalent. Typical issues revolve around:

  1. employment status

  2. income taxed as profits of a profession or vocation

  3. self-employed or partnership trading vehicle

  4. complex contracts for provision of medical services

  5. super-annuity payments

  6. historic expense treatments

Many of the unique issues relating to doctors and dentists arise from their position within the National Health Service (NHS).

Historically, doctors and dentists have been treated as independent contractors to the NHS. Consequently, their tax position has followed that treatment. Their income has been treated as profits from a profession or vocation. That is, they have been treated as self-employed individuals rather

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