Doctors and dentists ― self-employed income

By Tolley in association with Julie Butler

The following Owner-Managed Businesses guidance note by Tolley in association with Julie Butler provides comprehensive and up to date tax information covering:

  • Doctors and dentists ― self-employed income
  • NHS income
  • Private income
  • Reimbursement of surgery expenses
  • Improvement grants
  • Locum practitioners

NHS income

Medical and dental practitioners working for the NHS receive an overall payment in respect of the provision of medical or dental services. The amount that they earn is derived from a capitation basis and includes elements relating to performance and reimbursement of costs.

GMS SFE (2012) ; PDS SFE  (Department of Health website); GDS SFE  (Department of Health website)

Capitation broadly relates to the number of patients that a practice has on its list. It also takes into account the demographic served within that area to a certain extent. The performance element includes allowances for elements relating to specific items under the Quality and Outcomes Framework (QOF). There are essentially two types of payment received: achievement payments and aspiration payments.

Further to this, there are specific payments relating to specific costs such as locums employed to cover maternity, paternity or sickness leave, seniority rates, dispensing, flexible care scheme and so on. There are also supervision fees relating to the cost of training assistants, inducement payments for acting in certain areas and reimbursement of rents and rates for practice accommodation.

These allowances are included within the practice receipts taxable as profits from a profession or vocation.


The fees received by the practice are effectively for the provision of medical services. The basis of calculation of those fees is irrelevant. Where the practitioners are aware of the basis, this may need to be clarified with them.

For example, where an element of the practice’s fees are calculated with respect to rent, this is still treated as profits of a profession. There is an advantage to be gained by treating earnings as rent, avoiding NICs, but reimbursement of premises costs do not constitute rental income. See below for more details.

NHS GMS Premises costs ― directions 2013 

HMRC has been responsible for a number of ‘civil

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