By Mr. Muhammed Azeem Dosani
Introduction
Hi my name is Muhammed Azeem Dosani. I am a
partner at a local accounting firm, Fletchers Thatchers
& Dosanis.
We specialise in providing services to doctors.
Before we start, I would like to congratulate all of you.
Some of you have passed your CSA & AKT, while
others are on their way soon.
Introduction to accounts
 Today I will presenting a lecture on accounts, that are
relevant for medical practitioners and the industry itself.
-What are accounts?
I will explain this in the form of a short story so it is easy for
everyone to relate.
When I was in year 3, I was taken on a picnic to a local
park. I had a really nice day and really enjoyed myself. The
next day, I was told to write an account of the day at the
park. Before I started out, I thought accounts was a story,
which is, in fact, true.
Self- employment vs. Employment
 Locum
 Partner in a practice.
 Expenses can be claimed.

Options: Ltd co. Vs. Self-employment
Qualitative factors to consider
 Legal advice
 Subscription paid by the partnership when one partner has to go through
disciplining committee proceeding locum. Money paid by the practice.
 Everybody suffers financially.
 Senior partners – age
 Culture of the organisation & morale of the staff.
 Partnership is like a marriage. If successful, it leads to peace of mind. If its
unsuccessful (divorce), it is very stressful and could adversely affect health.
Introduction- continued
An account is a story. It is a story of about the income,
expenditure, assets & liabilities of a particular
individual or organisation.
It provides valuable information that helps us in keeping
the tax affairs up to date. It is an overview of how well
an organisation has performed, whether its made
more profit than the previous year, or the overall
profitability has gone down.
What are practice accounts
 It is a historical record of the financial performance of the practice.
 The accounts are prepared using the books and records that the
practice maintain throughout the year.
 They consist of profit & loss accounts and Balance Sheet.
Some practices make periodic management accounts which
help them to work out how much each partner should
withdraw.
Profit & loss- record of practice income & expenses.
Balance sheet- provides practice with a value of their assets & each
partner`s share of those assets .
Notes to the accounts- the accounts will include notes to support the
profit & loss account and the balance sheet.
Significance of Profit & loss
account
 Shows profitability of the practice.
 GP practice managers & partners are running the business




and the objective is to make a profit.
New partners thinking about joining, will be interested in
the profitability of the practice.
Profits need to be calculated for tax purposes.
Profits of the practice are allocated among the partners in
the respective percentage/ share of the partnership.
Profits sharing ratios are usually based on number of
sessions worked.
Balance sheet & Current account
 Balance Sheet shows a snapshot of the practice assets
& liabilities.
 Two halves of the Balance Sheet – top half lists the
assets and liabilities, the bottom half shows each
partners ownership of those assets- both halves will be
equal.
 Current accounts are very important as they show the
individual partners money left in the practice.
Drawings
 Need to be set at a realistic level, take into account
expected lost income and/or increased expenses.
 Drawings need to be reduced to take into account of
changes to superannuationrates gone up. Employers pension rate is
going up ( 1% projected rise every year for
the
next 5 years).
 Review throughout the year of the practice. If the practice
is getting into cash flow problems, may need to reduce
drawings.
- may need to inject some capital or
borrow from banks.
Purpose of accounts
 Calculate profit to declare on the tax return to HMRC.
 Useful tool in making financial decisions.
 Calculating projected drawings.
 Bank or financial institutions may require accounts for
lending purposes.
Purpose of accounts - 2
 Accounts will usually be prepared annually to the practice
year end. These days in medium/large practices,
management accounts are prepared periodically, so
decisions regarding partners drawings and tax and NIC
payments can be made.
 Accounts will include comparative figures, these will be the
results for the previous accounting period.
 Figures in brackets means they are deducted from another
figure in the accounts.
Superannuation for GP`s
 Superannuation based on GP`s NHS pensionable profits.
 Gp`s to complete end of year certificate to declare profits.
 PCT makes deductions each month based on an estimate of profits.
 Once certificate is submitted, PCT will collect any shortfall or refund of
superannuation.
 Ensure PCT deducting superannuation using up to date estimate of
profits.
 GP & non GP partners responsible for both employees & employers
superannuation.
Superannuation - 2
 Superannuation contribution rates:
- Employees contribution increased for 1st April 2015.
Based on tiered Contribution rates:
0-15k
5%
15k-21.5k
5.1%
21.5k-26.82k
7.1%
26.82k-47.845k
9.3%
47.845k-70.6k12.5%
70.63k-111.37k 13.5%
111.37k-over 14.8%
 Earnings cap removed for employee and employer contribution.
 Employers contribution rate will increase for 14.3%
Related tax rates & NIC
Employment
 Personal Allowance
 Tax


Self Employment
£10,600
20%(0-£31785)
40%(£31786-£150,000)
45%( Over £150,000)
£10,600
20%(0-£31785)
40%(£31786-£150,000)
45% ( Over £150,000)
12%(£8060-£40,040)
2%( Above £40,040)
N/A
N/A
13.8%(£8,113-42,385)
N/A)

 NIC 1 ( EE)


 NIC 1 ( ER)
Tax rates & NIC
 NIC Class 1 A (Benefits)
 NIC Class 2
N/A
 NIC Class 4
N/A
13.8( All benefits)
N/A
£2.8(PerWeek)
9%(£8,060-
£42,385)
2%(Above
£42,385)
 (NB:Tax Year 2015-16)
Self-Employment- GP`s
 Any private source of income can be declared under self-
employment.
These include and are not limited to:
-Police reports.
-Cremation forms.
-Insurance reports.
-Locum income/out of hours work.
Self employment- Gp`s
 There are quite a few allowable expenses that one can claim back
directly. The list includes and is not exhausted to:-
 Travel expenses- i.e. Mileage allowance(HMRC allows a mileage
allowance of 45p/Per mile) excess/less payment may be
benefit/expense.
 Subscriptions paid to BMA, GMC, RCGP, MPS & MDU fees.
 Equipment e.g. Computer, Laptop, thermometer, stethoscope etc.
 Use of home as office.
 Superannuation.
Deductible expenses
 Training/course fees
 Protective clothing
 Rent and rates
 Salaries
 Donations
 Insurance
 Accountancy Fee
Deductible expenses
 Cleaning , Laundry
 Other Expenses
 Bank Interest and Charges
 L.M.C Levies
Self employment- GP`s
-Wear & tear of equipment (Business use only)
Applicable rates may be 100%,18%, or 8%
-Payroll is processed weekly/monthly and tax, NIC as well as pension deducted is
paid monthly.
-Record keeping
all invoices should be kept safe up to 5 years after the end of the relevant
accounting year.
-Year end date is normally 5th April for self employed people and routine work
involves: i) Preparation of Annual Accounts
 ii) Submission of Self Assessment Tax Returns
 iii) Tax calculation and Tax Payment.
Self-employment Gp`s
-Tax calculations, tax payments and its important dates:
 i) Filing deadline, 31st January every year
 ii) First POA should be paid not later than 31st January
 iii) Second POA be paid not later than 31st July following
the tax year
Pros and cons of a Ltd Co.
-1 Which income can be declared in the Company
i) Out of hours work/Locum etc.
-2 Year end Activities
i)-Preparation and submission of annual accounts / Annual Return
ii) Calculation of tax and its payment
iii) Tax need to be paid not later than 9 months following the
company’s year end.
-3 Profit can be retained depending upon personal income of director.
-4 All expenses mentioned under self Employment heading can be
claimed
-5 Dividend gets 10% tax credit in personal tax returns
Pros & Cons continued
-6 There will be no superannuation deducted if the client is a limited company.
-7 Accumulated profit can be drawn out as CGT on cessation of the company
-8Salary of spouse etc. can be claimed for administrative work.
-9 Profit of the company can be drawn out as Salary, dividend, CGT etc
-10Following Tax Rates apply to the Ltd company.
0-300k
300k-1500k
Over 1500k
2016
20%
20%
20%
2015
20%
21.25%
21%
Pensions/Superannuation
 1.Contributions made are allowable deductions to calculate the profit of Self
Employment/Company
 2.Pension contribution will be deducted from your salary before calculating PAYE Tax for
employee
 3.Annual Allowance charge
i) Annual Allowance: Growth in your pension benefits ( Closing Value-Opening
Value)
ii) Tax may be payable if Annual pension growth is more than Annual Allowance
ii) Annual Allowance can be carried forward for 3 Years up to £50,000
iii) Pension Provider can pay Annual Allowance Charge if more than £2000, out of
your pension pot. One needs to write to it before 31st July
Pensions/Superannuation-2
iv) Annual Allowance limit
Annual Allowance
Before 5th April 2011
255,000
6th April 2011 to 5th April 2014
50,000
6th April 2014 onwards
40,000
v) Reduced Annual Allowance if money is taken out of pension pot.
 Defined Contributions Scheme
£10,000
 Defined Benefit Scheme
£30,000
vi) Enhanced Pension Savings Annual Allowance: £40,000 Plus
unused Annual Allowance up to 3 years
Pensions/Superannuation - 3
vii) Life time Allowance
Before 6th April 2012
 6th April 2012 to 5th April 2014
 6th April 2014 to 5th April 2016
 6th April 2016 to 5th April 2017
from 2018)
£1.8 M
£1.5 M
£1.25 M
£1.00 M(rise/fall with inflation
vii) 2016 Protection
 Life time Allowance ( £1.25 M) can be protected with HMRC
viii) Before 5th April 2015 Excess of Life time Allowance was taxed as follows.
 Chargeable to tax as income @55%
Lump sum – (Lifetime Allowance +
unused Annual Allowance of last three years)
Pension/Superannuation-4
2015 Major changes
4.
i) Flexible access to pensions from age 55
ii) Taxed as income
Lump sum less 25% of lump sum tax free
iii) Taxed as income
Smaller Lump sums less 25% of each withdrawal tax
free when the individual needs
iv) One can take only 25% tax free lump sum of total pension pot
v) The income from an annuity would be taxed as normal income If one buys
annuity
vi) Annual Allowance is £40,000 and reduced further to £10,000 for the
individual who have flexibly accessed a pension.
Trusts
-Why trusts?
Set up trusts to escape one generation from tax liability.
-Types of trusts
Bare Trust, Interest in possession, Discretionary Trust, Accumulation Trust,
Mixed Trusts, Settler Interested Trusts, Non Resident Trusts
- The way to pass on income tax liability to next generation
-Tax rates and tax refund
Dividend(£)
All other income(£)
(A)Accumulation/Discretionary Trust
0- £10,000
Above £10,000
10%
37.5%
20%
45%
(B) Interest in possession Trust
10%
20%
NB: 10% is tax credit on dividend from company
How can we help you?
 1-Accounts and Tax planning
 2- Management accounts
 3-Analytical review on accounts