Johnston Carmichael launches online tool to help locum nurses and GPs affected by new tax rules

Johnston Carmichael has developed an innovative online tool to help self-employed NHS workers operating as a limited company to protect their income.

The free calculator will enable temporary healthcare workers to check how much they could save by using a member’s voluntary liquidation (MVL) to wind down their companies following new rules that reduce the tax benefits of being self-employed.

Under the regulations, introduced on April 6, contractors to the public sector – including locum doctors and nurses working in the NHS – will be treated as employees and become subject to PAYE.

The changes could lead to a substantial loss in earnings for some workers, with the Locum Doctors Union estimating that some could see their income reduced by up to 50 per cent.

Johnston Carmichael developed its online calculator after identifying the need amongst thousands of temporary NHS workers and their financial advisers. It has been reported that all agency staff working in the NHS will be subject to PAYE and on payroll.

Donald McNaught, restructuring partner and MVL specialist at Johnston Carmichael, said: “Operating as a limited company may no longer be the best option for self-employed health workers following the recent changes.

“MVLs are a tax-efficient way of wrapping up limited companies, as they allow money to be moved without being taxed at a higher rate through Entrepreneurs Relief. MVLs also give scope to benefit from your annual capital gains allowance.

“Our online calculator, will help people who are considering this option work out the best financial solution. We’re being approached for help by many individual healthcare workers, and even more so, their advisors. The calculator, or the face to face advice we can provide, will help contractors identify the most efficient approach.

“Some of the options they might consider include being classed as employees or retiring, meaning their limited company is no longer required. If there is accrued profit in the company, we can help them access it.”

Mr McNaught encouraged healthcare workers who have been affected and their financial advisers to visit Johnston Carmichael’s website for further advice. Johnston Carmichael employs almost 700 staff across 11 offices and is one of the UK’s top 20 accountancy firms.

He added: “While MVLs are a tax efficient way of dealing with the changes, there are other options available. I’d urge any healthcare workers who are concerned about the new legislation to get in touch. We will work with their existing tax and financial advisers to make sure all options are considered and any solution proposed is appropriate for their personal circumstances.”

To access Johnston Carmichael’s online calculator visit: jcca.co.uk/mvlcalculator