Incorporating a medical or dental practice

A limited liability structure provides Doctors, Consultants and Dental practitions with several benefits:-

1. income tax saving opportunities,
2. improved pension options,
3. asset-protection, and
4. added personal financial protection.

Dentists face a unique difficulty due to an arcane prohibition on the practice of dentistry by companies. That said, options exist for tax planning for most professional types.

There reasons to incorporate are many and include:-

• Access to a corporation tax of 20% compared with a marginal tax rate of 55% for individuals,
• Significant improvement in business cashflow (80% of earnings) for development and loan repayments compared with 45% when trading as an individual practitioner
• The provision of tax-free 'electric' company vehicles,
• Substantially improved pension funding options,
• The abiltiy to cross-lend to other business interests tax-efficiently, and
• asset-protection and greater protection from claims and gaps in PI cover.

Dentists face a unique difficulty due to an arcane prohibition on the practice of dentistry by companies.

Currently dentists cannot practice dentistry through a company as this is specifically prohibited under Section 52 of the Dentists Act 1985.

Thankfully, the legislation leaves scope for the incorporation of dental related services.

There are currently two options for the incorporation of a dental practice: full incorporation and partial incorporation.

In practice the incorporation option may be available to larger dental practices, i.e. those with a principal dentist and profit participating dentists

It may be necessary to modify the business structure, however, incorporation is an option available to the dental group.

Unfortunately, this does rule out the incorporation of the dental practice operated by a single practitioner. But all is not lost, it may be viable for a single practitioner to partially incorporate part of the business.

There are also options to incorporate for dentists who do not practice routine dentistry and specialise instead.