Money Matters

Experts offering insight and advice on the financial issues of the day

16 March is pension decision day for doctors

By Thomas Skinner, consultant in financial services at Smith & Williamson - 27th February 2015 5:24 pm

March 16th is looming over the medical sector but thousands of doctors and healthcare professionals still do not realise its significance. However, if those affected fail to properly prepare their finances and consider potential pension options there could be dramatic consequences in retirement.

Many doctors, particularly those aged between 45 and 55, remain unaware that they face a critical decision regarding which NHS pension scheme they should remain with. They may have been under the impression that their NHS pension was one of the few financial matters they did not have to be concerned with but the opposite is now true.

Many doctors remain oblivious to the fact that after April 1st their retirement age, income and scheme itself will be irreversibly altered and that their last chance to influence this is March 16th.

There are currently two NHS pension schemes; 1995 and 2008 but from April 1st there will be a third, 2015 scheme. A key difference between the various schemes is the age of retirement: the 1995 scheme allows retirement at 60 and the 2008 scheme places it at 65.

Crucially however, under the mandated scheme for those under 50 on April 1st 2012, the 2015 scheme will only allow its associated retirement benefits to be claimed in line with state pension age and not before.

The financial implications for doctors and medical consultants following this alteration are seemingly being underestimated by most within the healthcare industry. It will particularly come as a shock to those in their early fifties who may suddenly find their expected working life remaining has doubled.

There are further complications for those, in the 1995 scheme, who had planned to begin taking the benefits of their retirement package at age 60. Should a beneficiary of the scheme begin claiming these, and wish to continue working for the NHS, they will be unable to continue funding any NHS pension scheme.

People in these circumstances would have to finance other retirement vehicles such as private pensions or ISAs instead.

The 2015 scheme does however offer some benefits; It has a much faster defined benefit accrual rate of 1/54 of your pensionable pay which is better than the 1995 and 2008 schemes, standing at 1/80 and 1/60 respectively.

Ultimately, the choice surrounding which scheme to be associated with is highly individual and depends on where the person wishes to be, financially and professionally, at various stages in their life. Unfortunately, many doctors are not realising the ramifications of this decision and are therefore not addressing the issue. We would encourage anyone who thinks they may be affected to review their financial position and act now before it is too late.

Doctors’ training costs: are they tax deductible?

By Jason Sharp - 17th October 2013 5:11 pm

Doctors often wonder whether training costs are tax deductible.

HM Revenue and Customs state that a deduction for training costs incurred by an employee will only be allowed if the employee concerned was directly employed on a training contract.

The training has to be an intrinsic part of the contractual duties of the employment.

HM Revenue and Customs provide the following example:

“A trainee doctor employed as a registrar on a training contract is required, as a stated contractual duty of the employment, to attend various external training courses.

“As part of the duties of the employment there is a mandatory requirement to maintain a national training number by attending a series of training courses and events.

“Failure to complete the course and obtain the qualification will mean that he cannot proceed to the next stage of his chosen profession.

“Attendance at the training events is an intrinsic part of the employment and one of the duties of the employment. The costs of travel to the events, course fees and other associated costs met by the employee are deductible.”

But, be warned, HM Revenue and Customs will also ask the doctor to demonstrate that failure to complete the training and obtain the qualification will mean that you will not be able to continue in employment with the employer in the role that would otherwise have been available to you after qualification.

Read more here.

Authored by Jason Sharp at Doctors Tax Limited and should be used for general guidance purposes only.

Lining up retirement income plus a holiday home

By Moira O’Neill, personal finance editor, Investors Chronicle - 15th October 2013 11:26 am

Investors Chronicle has reviewed the investment portfolio of a 53-year-old NHS surgeon.

Adam earns £220,000 a year from NHS and private work and his wife earns £12,000 a year as a personal assistant.

They want to retire in 7 years’ time on two-thirds of current income, funded from NHS and private pensions and their £560,000 investment portfolio. They also want to have £400,000-£500,000 in surplus savings to purchase a holiday home at the time of retirement or a couple of years before.

Investors Chronicle’s expert commentators say that Adam is holding too many actively managed investment funds and is therefore paying too much in fees to investment managers. He should consolidate his holdings to between 30 and 40 investments, ditching some of his investment funds in favour of simple tracker funds or exchange-traded funds which are lower cost.

He should also transfer the investments that he holds outside an individual savings account into his wife’s name to reduce the amount he pays in income tax.

They also point out that the reduction in the lifetime pension allowance to £1.25 million from £1.5 million that comes into effect in April 2014 will directly affect Adam’s income in retirement. However, Adam could apply for protection from HMRC before April 2014 to secure a higher pension.

To buy the retirement property, the advice is that Adam should move some of his investments into dated fixed interest securities with a five to seven year maturity and a gross redemption yield of at least 5%.

You can see all of Adam’s investment portfolio and read the full review on the Investors Chronicle’s website.

VAT guidance implications for medical companies

By Jason Sharp - 25th September 2013 5:32 pm

New guidance suggests that supplying medical services via a company may no longer be VAT exempt.

The guidance in VAT notice 701/57 states that if you are a qualifying health professional your services are exempt when both of the following conditions are met: 1. The services are within the profession in which you are registered to practise. 2. The primary purpose of the services is the protection, maintenance or restoration of the health of the person concerned.

However, in a recent tax case (Rapid Sequence Limited) HM Revenue & Customs (HMRC) have successfully argued that locum doctors provided to NHS hospitals via a medical agency was a taxable supply (not an exempt supply). As such the medical agency should apply VAT to their invoices.

The tax tribunal found that the VAT exemption only applies to the ‘supply of medical care’ and in this case the agency was supplying staff to the NHS not providing medical care.

This is a very worrying decision as it has been suggested that this is the first case in which HMRC have successfully argued that an EC Directive overrides UK legislation to the taxpayer’s detriment.

It is very early days but the immediate concern is how this ruling affects doctors who provide services through their own company. Whilst your own company is not a medical recruitment agency, will HMRC now argue that this structure is just the same as that of Rapid Sequence Limited? i.e. the supply of staff by a company.

If you are using a company as your business trading vehicle it would be prudent to review the VAT position as a matter of urgency.

A further consequence of the decision is that businesses could be subject to VAT assessments in respect of its past supplies.

The tax tribunal actually said: “We would understand if Rapid Sequence finds this outcome highly unsatisfactory.” HMRC has accepted that the wording in their guidance is “unfortunate” and “problematic” and the tribunal commented that they hoped HMRC will view Rapid Sequence’s position sympathetically - whatever that means.

Authored by Jason Sharp at Doctors Tax Limited and should be used for general guidance purposes only.

Watch out for the dancing gorilla

By Dev Lall - 1st March 2013 10:38 am

It seems radiologists and basketball fans share something unexpected in common.

Namely, the inability to see dancing gorillas. A recent study by a Harvard psychologist studying inattentional blindness looked at the ability of radiologists to spot tiny features on a thoracic CT that might indicate lung cancer. They were, as you might expect, very good at this.

Except, on some of the CTs was a deliberately superimposed, out-of-place image - a dancing gorilla.

And when questioned later 80% of the radiologists said they had not seen the gorilla, despite eye-tracking scans showing they had looked directly at it.

It seems that our vitamin D - deficient colleagues (only joking, guys) are fantastic at spotting subtle indicators of disease on the CTs but miss other things that are somewhat more obvious.

The study builds upon work done in the 1990s when a similar phenomenon was demonstrated in people watching a basketball game, with the aim of counting the number of passes made by members of one of the teams.

In that study a man in a gorilla suit walks onto the court, beats his chest repeatedly then walks off, spending a total of 9 seconds on screen. Half the observers did not see the gorilla.

When you think about it, it isn’t so surprising. We have only so much computing power in our brains, and if too much is going on we miss stuff. Just think back to when you’ve been driving a car whilst having a conversation with the passenger. If something happening on the road has required more of your attention you find you’ve missed part of the conversation you were just having and have to ask them to repeat what they just said.

And the same is true with our private practices, I think.

We spend so much time attending to the ‘task in hand’ - seeing patients - that we neglect the most important aspect of any practice, which is of course the generating of more patients to see in the future.

A problem exacerbated by the fact we are far less familiar with how to get more patients than we are with treating the ones we have, so the easy option is to stick with what we know.

So this weekend, when you’re scanning through your diary for the coming week, why not spend some time considering how to grow your practice, how you’re going to get more patients?

After all, it would be a shame to miss seeing the dancing gorilla in your own practice, wouldn’t it?

Dev Lall runs The Private Practice Expert.

Three - that’s the magic number for private practice

By Dev Lall - 16th January 2013 12:50 pm

There are three big costs in business - one visible, the other two almost invisible.

The first cost - the visible one - is pretty obvious: the cost of the money you spend or the consequences of the actions you take.

I think we’re all aware of those. Costs such as indemnity fees, room fees, secretarial fees…the list goes on.

The second cost is invisible to most. This is the cost of not putting your prices up, even if it’s just to match the inexorable increase in your costs due to inflation. In other words, if the rate of inflation is, say, 2.5%, and you don’t raise your prices for a year, that’s a de facto price cut.

Think about it. The medical insurance companies sure have.

The third cost is also invisible. It is the opportunity cost of NOT doing things.

For example, you might have a great idea about how to publicise your practice and so get in more patients. Or an idea of a new service you could provide (health checks or ‘personal MOTs’ for example) which would again increase your practice income as you could promote this to past as well as new patients.

Or you might see something a colleague is doing in their practice and think to yourself “Hmm, maybe I should try that”. And yet, when it comes down to it nothing gets done. That new idea doesn’t get implemented. That new service doesn’t get created. The practice doesn’t get promoted.

And that’s the nigh-on invisible cost: the opportunity cost. The income you didn’t get because you didn’t implement the idea.

So I’m going to buck the trend this New Year. I’m not going to talk about resolutions - nor have I made any.

But I am starting the year with the words ‘Opportunity Cost’ right at the very front of my mind. I just hope I can keep it there over the coming year.

For business tips please visit The Private Practice Expert.

Why I am so in love with deadlines

By Dev Lall - 20th November 2012 8:39 am

‘Deadlines…I love the whooshing noise they make as they go by,’ Douglas Adams (1952 - 2001).

On the 11th March 2012 Douglas Adams, had he lived, would have been 60-years-old.

Famous for the Hitch Hikers trilogy (in 5 parts) as well as the Dirk Gently novels, he was an astonishingly gifted writer, but for one thing - his difficulty with keeping to deadlines.

He once even had to be locked in a hotel room for 3 weeks with his editor so he would finish the book So Long, and Thanks For All The Fish.

When it comes to our private practices, many of us have the same problem. We would far rather be working IN our practices, seeing and treating patients - than working ON our practices, doing the marketing to get patients in through the door.

I think part of the reason for this is that it isn’t necessarily very easy - certainly it doesn’t come as easy to us as treating patients, because we’ve all done that for many years. Now all of a sudden we have to learn something new. And because it’s new and difficult (at first) we’re out of our comfort zone and tend to avoid it.

But you know, anything worthwhile takes time and effort. It took time and effort (didn’t it just!) to reach the level of consultant, and to grow and develop your private practice will take time and effort too.

Now, locking yourself in a hotel room for three weeks to sort out your practice marketing may or may not be a bit extreme.

But if you tackle it head on, not only will it get easier but also a lot more FUN as you start to see your income rise, and your practice grow.

So why not sit down with your diary and allocate some time where you are going to plan out your marketing campaign. Writing some articles, record some videos. Launch that website.

Because in the same way that the Hitch Hikers books went on to sell millions of copies and make Douglas Adams a very rich man, the time you invest on sorting out your marketing will pay you back many, many fold over the coming years.

For free daily tips on how to grow your private practice visit Private Practice Expert.

Vital to make patients feel good about themselves

By Dev Lall - 17th October 2012 9:16 am

It’s easy to waste time. I myself did a great job of it this morning, in fact, by reliving my childhood.

See, instead of doing some real work, I spent some time on YouTube, looking at videos from when I was a kid.

Specifically, Back to the Future clips. (If like me you were a kid in the 80’s I DARE you not to feel a stirring inside when you watch it.)

Now you know the crazy thing? Here’s the script:

Terrorist: Go, go!

Marty McFly: Come on, move!

Marty McFly: Holy shit!

Marty McFly: Let’s see if you bastards can do 90…

And that’s it. Fifteen words. But how did it make you feel inside?

Excited. Heart racing. Probably with a big grin on your face.

You see, people don’t remember what you say. They remember how you make them feel.

Which is one of the reasons breaking bad news to patients can be such a difficult task. Because the news you break to them is bad, but you somehow also have to give them hope and a sense that not only do you care, but there is something that can be done for them - even if there isn’t very much. A difficult task indeed.

And which is also why you get complaints, more often than not. Frequently not because of what you said, but because of how the patient felt - they thought you were rude, dismissive, uncaring - even if you really weren’t.

So here’s the thing. Making patients feel good about themselves is far more important, in some ways, than being a good clinician. Think back to your own experience with colleagues: which get the fewest complaints? The warmest, most open, almost touchy-feely ones, I’ll bet. And are they the best clinicians? Sometimes. But usually not.

You can use this simple fact in other ways too.

In all your communication with your patients, you not only need to focus on the benefits of what you do (rather than the ‘thing’ of what you do) but also think about how you want them to feel. Think about coming across as a warm, avuncular uncle/aunt type person in all your marketing materials and on your website - which is where your potential patients will first encounter you, and where they will decide if they want to see you.

Make your patients feel good inside and your practice will fly. Even for those of us without a touchy-feely bone in our bodies.

Surgeons like me, for example.

Dev Lall (FRCS) runs Private Practice Expert. Visit for free daily tips on how to grow your private practice.

Private practice: beating professional sabotage

By Dev Lall - 1st October 2012 9:38 am

I had an interesting conversation yesterday.

A new consultant was telling me how his trust was trying to encourage consultants to bring their private patients to the private patients unit that was part of that NHS hospital.

Good idea. Convenient. Lots of people around in case of problems. Could work well for everybody.

Yet private patients were being cancelled for all the same reasons that NHS ones so frequently are - no beds, not enough nursing staff, the usual crap.

Not so good.

And there was even skulduggery afoot. Yes, genuine sabotage I’m afraid.

For example, this particular consultant had a private patient scheduled to go on to the end of an NHS list that his ‘colleague’ was using.

His ‘colleague’ only had a short list so shouldn’t have been a problem.

But no. His cases inexplicably overran, got delayed, were slow and oh dear! What a shame! Sorry old boy! There was no time for the private case at the end of the list after all, so it was cancelled at the last minute.

Sabotaged by his colleague. Despite the fact the person I was talking to was a newbie, a consultant of only nine months standing who had only ever had four private patients. He had made a mess of his coding so was undercharging. He hadn’t even secured admitting rights down the road. Hardly a threat to anyone, surely?

Yet this other more senior guy STILL felt the need to shaft him good and proper.

It’s not often I’m speechless, but I was when I heard that little tale.

The private patient pie is big, and getting bigger. There’s plenty out there, if you know how to find it (or better yet if you happen to know how to have IT find YOU). Yet the private patient pie is finite. And when it comes to private practice success, as in all other endeavours, there are going to be winners and losers.

Those who know how to market themselves, who are willing to invest in themselves and their future, they will grab a big chunk of the pie. Do well. Get a good reputation. Have a busy practice. And earn a lot of money, of course.

So let those other scumbags (like the doc above) grub around in their jealous, mean-spirited fashion. Because you, with good marketing in place, won’t need to worry about the odd cancellation or delayed case.

And you can then give your ‘colleague’ something to really be jealous about.

Dev Lall (FRCS) runs Private Practice Expert. Visit for free daily tips on how to grow your private practice.

Concentrate on the good stuff to up profits

By Dev Lall - 14th September 2012 12:25 pm

My life is seriously wonky.

I spend hours and hours of the day doing things of little consequence - checking emails, answering phone calls, the usual stuff of life. Seeing follow-ups in clinic that really don’t need to be there. Reading journals and articles which are tedious, dull and really don’t add much of any consequence to the planets body of knowledge on inflammatory bowel disease. Or whatever.

I’m sure your life is wonky too, if you stop to have a look at it.

You see an Italian economist by the name of Vilfredo Pareto, observed all this wonkiness in 1897. Of course he had to dress it up as Pareto’s theory of predictable imbalance or no-one would have taken him seriously, but it started with the observation that 80% of the land in England (and every country he subsequently studied) was owned by 20% of the population. It later turned out this wonkiness was everywhere, usually 80:20 but sometimes 95:5, or 60:40. Always wonky.

In practical terms, it means that perhaps 80% of your results come from only about 20% of your efforts. And this is an extremely important insight.

For example, most of us have done research, many a higher degree. And think about all the experimental work you did for it. I don’t know about you but I recall very clearly how at least 70% of my discussion pivoted on just a few results from all the experiments I performed.

What about your private work? Interestingly, a very significant minority of your private patients, about 20% (but might be 35%, might be 15%, but a significant minority) is responsible for the vast majority of your private income. About 80%. The remaining 20% of your income comes from the rest.

Now how about if you saw less of that less profitable patient group and spent that time seeing more of those profitable patients? What do you think that would do to your income?

Say you earned £100,000 a year from your practice: 20% contributed 80% of that income i.e. £80,000. So, 80% of your patients only produced 20% i.e. £20 000 in income.

Now, once you know this there are rather a lot of nice opportunities that become apparent:

1. You could cut out 80% of your practice and spend all the liberated free time with your family/mistress/toy boy/on the golf course/in the pub/furthering your NHS career and STILL take home £80,000 and have a whole lot more fun doing it.

2. You could cut out that 80% of your practice, double the 20% of profitable patients and take home £160,000 p.a. and still spend the extra 60% of free time you’ve liberated with the family/mistress/toy boy etc.

3. Or if you wanted to go completely bananas you could delete the 80% of relatively unprofitable patients, spend that time on treating patients in the profitable 20% group and find that you’re taking home £400,000 a year yet not working any harder for it than you were when you were taking home £80,000.

It’s a thought, isn’t it?

So, why not scratch under the skin of your practice and see where the wonkiness lies. Where does the majority of your private income come from? Is it a particular clinical condition? Is it medicolegal work?

Then cut the less profitable stuff and decide how you want to spend all that free time you’ve liberated. Because now you have options…and we all like that.

Dev Lall (FRCS) runs Private Practice Expert. Visit for free daily tips on how to grow your private practice.