There has been much debate recently about whether you can incorporate (transfer your dental business to a limited company) and still maintain your eligibility for the NHS pension. This largely depends on whether you are a ‘provider’ or a ‘performer’.
A GDS or PDS Practice may be owned by a single-hander or by a partnership. It may also be a company limited by shares (or DBC). Where a shareholder is a qualified (and listed) dentist they are afforded type 1 dental Practitioner/Provider status under the NHS Pension Scheme (‘NHSPS’) Regulations. As you would suspect, if the shareholder is not a qualified dentist they do not have access to the NHSPS.
A shareholder must ‘pension’ all the GDS/PDS income that they take (i.e. draw down) from the business in the form of salary and dividends. Any GDS/PDS income that is not taken but left in the business cannot be pensioned now or in future years.
If a Provider opts out of the NHSPS or is ineligible to join, their colleagues cannot ‘pension’ their GDS/PDS income.
If a Performer (i.e. Associate) works for a GDS/PDS Contractor as an individual, they are also afforded type 1 dental Practitioner NHSPS status. However if a Performer creates a limited company and works at the Practice through that limited company they (or anyone else who works for the Performer’s limited company) cannot pension their GDS/PDS income with effect from 7th November 2011. This is because this sub-contractor limited company is not recognised under the statutory NHSPS Regulations.
So a Performer must work as an individual (not through a unique limited company) to be able to pension their GDS/PDS income with effect from the 7th of November 2011.
For more information on whether the tax benefits of incorporation outweigh the advantages of your NHSPS eligibility please click here to request a call back….
NHS Pension Scheme Changes
As a result of Lord Hutton’s report into public sector pensions, the Government has made it clear they will introduce changes to the NHS pension scheme in 2015. The good news is that they have also made a commitment that all pension benefits earned up to that point will be protected.
The main reason for this is that people are living longer and pensions are costing more.This cost has fallen on the tax payer. In the meantime, therefore, there is also a proposal to increase member contributions from April 2012 for anyone earning over £15,000 year.
For those earning over £21,000 a year, the increase could be an additional 2.4% in 2012/2013, rising to an extra 6% in 2014/2015. This is in addition to the 6.5% or more that members are currently paying.
Want to know more? A specialist dental IFA such as Essential Money can help you.