General Practitioners – Structured Solutions

Finance Act 2011

With the introduction of Finance Act 2011 self-employed medical practitioners are limited to making pension contributions against income up to a maximum of €115,000 per annum.  Furthermore, any other pensionable income (such as HSE or GMS earnings) makes up the first part of this €115,000 ceiling, meaning that private practice allowance for pension funding will be zero for doctors with public income of €115k pa or more.

It gets worse. The new Universal Social Charge (USC) is now payable on all self employed income over €16,016 @ 7% and @ 10% for earnings over €100,000 with no deduction for pension contributions.

In addition we will all have to work longer before qualifying for our State Contributory Pension with retirement age extended to 67 for persons retiring in 2021 and to age 68 from 2028.

 

The Solution

An unlimited company provides one innovative solution as the company can make contributions on behalf of the practitioner without reference to the €115,000 cap on earnings.  This means that significantly more funds can be put into a tax free, gross roll up environment, avoiding the universal social charge as well as income tax and capped only by a total fund threshold of €2.3m.

This is particularly attractive to General Practitioners as well as consultants who do not have long term HSE service.

The unlimited company is an effective solution as it fulfils two fundamental criteria for the medical practitioner:

  • The medical council do not want members to take any steps to limit their liability.  With an unlimited company this condition is met.
  • The unlimited company allows from employer contributions to be made on behalf of the practitioner whilst retaining full control over their own business.

 

Considerations when Incorporating

The promise of tax savings has lured many down the unlimited company route, only to find that it is not all plain sailing.  Time and again problems arise following incorporation.  Word of these problems gets passed around the medical community casting doubts over the unlimited company solution.  These concerns are valid and should not be dismissed, however once identified they can be resolved.  They act as an important warning that the right structures and contracts must be in place for the solution to work.  Simply setting up an unlimited company and thing your problems are solved won’t do.

The issues that need to be addressed include:

  • Treatment of payments from medical insurance providers
  • Professional Indemnity Insurance
  • GMS & HSE Payments
  • IHCA Concerns
  • State Claims Agency cover

 

Innovative Answers

The issues listed above on incorporation are real and need to be addressed.  They can be navigated with the correct structures in place.  In Byrne Curtin Kelly’s joint venture with MedCorp we have developed a tried and tested process which can

  • review each practice on its own merits
  • design a solution that can allow General Practitioners to increase / restore their net worth in the practice and
  • be implemented in conjunction with existing advisers.

 

Our process

  • Initial Appraisal
    This involves a brief, confidential questionnaire, which allows us to assess potential    options for the practice. The analysis includes a breakdown of the financial benefits from year one, including any associated costs.

Apart from being confidential, it is also free. Therefore the practice can assess whether this is the right option for them without incurring any cost.

  • Practice Meeting
    This involves meeting with the General Practitioners and their existing advisors to present solutions and agree upon the next phase.
  • Implementation
    Subject to agreement, the next phase is implementation. This normally takes up to 4 weeks.
  • Project Delivery
    The final result is your own unlimited company with all requisite contracts and documentation in place, ready to trade.

 

If you want to ensure you are making the most of your money and want a product provider with expertise in the field to guarantee you are getting the right advice then contact our expert team today!