www.pkf.co.uk © pkf (uk) llp ways for gps to save tax andrew tiplady 26 march 2009

www.pkf.co.uk © PKF (UK) LLP

Ways for GPs to save tax

Andrew Tiplady

26 March 2009

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Session Content

• Income Tax

– Business• Personal expenses• Capital allowances

– Personal

• Capital Gains Tax

• Inheritance Tax


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Income Tax – Business

• Maximising personal expenses claims– Subscriptions

– Sundry equipment

– Books / journals

– Postage / stationery

– Clothing etc……

• Timing of expenses– Buying equipment/new car


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• Motor expenses – Mileage log for business mileage

– 2nd car

• Business use of home– Area of home for business use

– Percentage of household bills

– Beware Capital Gains Tax

• Mobile / Home Telephone / Broadband– Log of business calls

– Line rental – 2nd line for business

– Is business main purpose for broadband?


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• Courses - UK / Overseas– GP’s particular role

– Adequate professional content

– Dual purpose – overseas

• Locum Insurance– Limited to meeting cost of locum cover

– Not income protection insurance

• Spouse’s Wages– Job description

– Commercial rate

– PAYE / Second job - tax return


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• Buying equipment / fixtures and fittings / fitting out a new building

– Claim maximum capital allowances claimed

– To be considered at the planning stage

– Require a full breakdown of spend

– Architect or Quantity Surveyor


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• Capital allowances from 6 April 2008:– Plant and Machinery - 20% WDA

– “Integral Feature” of a building - 10% WDA• Electrical system• Heating system / air conditioning• Lifts / escalators

– Annual Investment Allowance - £50,000• Not cars

– Energy and water-efficient - 100%• Authorised list


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• Accounting year end choice / change– Tax acceleration v pension dynamisation

– Use of overlap relief

• Timing of superannuation contributions– Tax relief when paid

– Cash flow• Note: Estimates of NHS Pensionable Profits/Pay –

2009/10 – to be submitted by 1 April 2009


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Income Tax - Personal

• Married couples– Use of personal allowance

– Use of lower tax bands

• Transferring income generating capital to spouse (outright & unconditional)

• Spouse’s salary (commercial)

– PAYE implications


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• Personal pension planning– 20% tax relief given at source– Additional 20% tax relief to be claimed via tax return

• Giving to charity– Higher rate tax relief– Carry back

• Tax efficient borrowing (Capital recycling)– Replace loans not qualifying for tax relief– Correct sequence of events – need advice– Early redemption penalties / interest rates

• Use of ‘Offset accounts’– Save 40% tax on interest received


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• Venture Capital Trusts (“VCT”)– Maximum annual investment - £200,000

– 30% income tax relief

– Tax free income and gains• Shares must be held for 5 years

• Enterprise Investment schemes (“EIS”)– Maximum annual investment - £500,000

– 20% income tax relief (as a deduction of income tax)

– Tax free income and gains• Shares must be held for 3 years

– Eligible losses - offset against income tax and CGT

– CGT deferral


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Capital Gains Tax

• Capital Gains Tax (“CGT”)– Annual exemption - £9,600

• CGT reliefs– Entrepreneurs’ relief (“ER”) from 6 April 2008

• Taper relief abolished 5 April 2008• ER – 10% effective rate of CGT up to £1m

– Lifetime limit of £1m for “business gains”– ER rules less flexible than taper relief

– Rollover relief– EIS CGT deferral– Principal Private Residence relief (“PPR”)

• 2 properties – election needed• Letting relief


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Capital Gains Tax

Property Ownership – on or off balance sheet?

• If held on partnership balance sheet

– If a partner sells the property or an asset used in the business – ER may not be available

• Disposal must coincide with the cessation of trade

• Partner selling property interest at the same time as retirement will get ER

– Partnership agreement»Contract for sale on retirement

• Beware - If property owned personally off partnership balance sheet

– Payment of rent denies ER


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Inheritance Tax

• Annual exemption - £3,000– Previous year’s annual exemption

• Small gifts exemption - £250

• Gifts for marriage - £1,000 to £5,000

• Gifting ‘Out of Income’– No reduction in capital– Pattern / habitual

• Nil rate band - £312,000 (2008/09)

• IHT after reliefs and Taper Relief – 40%


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Inheritance Tax

• Inheritance tax planning

– Have you got a Will?

– Use exemptions

– Remember interaction with CGT

– Use reliefs• Business Property Relief (“BPR”)


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Inheritance Tax

• Property Ownership – on or off balance sheet?

• Business Property Relief (“BPR”)

– 100% if a partnership asset

– 50% if asset owned personally by a partner but used by the partnership

• Need to consider partnership agreement

– Contract for sale - denies BPR• Put and call options


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Questions?

www.pkf.co.uk © pkf (uk) llp ways for gps to save tax andrew tiplady 26 march 2009

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