Setting up a limited company as a medical professional can be one of the most effective ways to manage income, tax efficiency and long-term financial growth. This guide is designed specifically for UK-based clinicians, including limited company locum doctors, locum vets, private healthcare professionals and vet nurses, who want to operate through a compliant and well-structured company.
With increasing numbers of medical professionals moving into locum, private or contract-based work, understanding how limited company structures work, and how to set them up correctly, has never been more important. With support from a specialist accountant for private healthcare, you can avoid common pitfalls and ensure full HMRC compliance from day one.
This article explains the entire process, from deciding whether a limited company is right for you, through to registration, tax responsibilities and ongoing compliance, so you can focus on clinical work while your finances remain under control.
Below, you’ll find a clear table of contents so you can jump straight to the sections most relevant to you.
Table of Contents:
- Why Medical Professionals Choose Limited Companies
- Who Can Set Up a Limited Company in the Medical Sector?
- How to Set Up a Limited Company as a Medical Professional
- Understanding Taxes for Medical Limited Companies
- Ongoing Compliance and Accounting Requirements
- Why Use a Specialist Medical Accountant?
Why Medical Professionals Choose Limited Companies
Medical professionals often choose limited companies because they offer greater control, tax efficiency and professional credibility.
Operating as a limited company separates you personally from the business entity. This means the company is responsible for contracts, invoices and liabilities, not you as an individual.
Key benefits for medical professionals
Limited companies are particularly attractive to clinicians working in flexible or contract-based roles because they allow for:
- Tax planning flexibility, including salary and dividend strategies
- Professional credibility with private healthcare organisations
- Clear separation between personal and business finances
- Potential pension and investment planning opportunities
For professionals such as a limited company locum doctor, a locum vet, or those working in private clinics, this structure is often preferred by agencies and healthcare providers.
Who Can Set Up a Limited Company in the Medical Sector?
Medical professionals across multiple disciplines can operate via limited companies, provided they meet regulatory and contractual requirements.
This structure is commonly used by:
- Locum doctors operating through limited companies
- Private consultants and specialists
- Locum vets and veterinary professionals
- Vet nurses exploring how to become a locum vet nurse via a limited company
- Pharmacists working in private or contract-based roles
Working with a specialist pharmacy accountant or medical accountant ensures your company setup aligns with both HMRC requirements and sector-specific regulations.
How to Set Up a Limited Company as a Medical Professional
Setting up a limited company in the UK is relatively straightforward, but getting it right from the outset is critical.
Step 1: Choose the Right Company Structure
A UK limited company must have:
- At least one director
- At least one shareholder (often the same person)
- A registered office address
Medical professionals typically set up a private limited company (Ltd) to deliver services to clinics, hospitals or agencies.
Step 2: Register with Companies House
To legally form your company, you must register with Companies House. This includes:
- Selecting a compliant company name
- Choosing a SIC code relevant to medical or healthcare services
- Providing director and shareholder details
Once approved, your company becomes a legal entity capable of trading.
Step 3: Set Up a Business Bank Account
A separate business bank account is essential for maintaining financial clarity and compliance.
All income from clinical work should be paid into the company account, and all expenses should be paid from it. This separation is vital for accurate accounting and tax reporting.
Step 4: Register for Corporation Tax
After incorporation, your company must be registered for Corporation Tax within three months of starting activity.
A specialist accountant for private healthcare can handle this process and ensure deadlines are met.
Step 5: Register for VAT (If Required)
Depending on turnover and services provided, VAT registration may be required or beneficial.
Medical VAT rules can be complex, particularly where exempt and taxable services overlap. Professional advice is essential here.
Understanding Taxes for Medical Limited Companies
Tax planning is one of the main reasons clinicians choose limited companies.
Corporation Tax
Limited companies pay Corporation Tax on their profits. This is calculated after allowable business expenses have been deducted.
Common allowable expenses for medical professionals include:
- Professional indemnity insurance
- CPD courses and training
- Medical equipment
- Accountancy fees
- Travel related to contract work
Director Salary and Dividends
Most medical professionals take income through a combination of:
- A director’s salary
- Dividends paid from company profits
This approach can be tax-efficient when structured correctly, but must be managed carefully to remain compliant with HMRC rules.
IR35 Considerations
IR35 legislation determines whether a contractor is genuinely operating independently.
A limited company locum doctor or locum vet must ensure their contracts reflect genuine business-to-business relationships. A specialist accountant can review contracts and working practices to mitigate IR35 risk.
Ongoing Compliance and Accounting Requirements
Running a limited company involves ongoing responsibilities beyond initial setup.
Annual Accounts and Confirmation Statements
Your company must submit:
- Statutory annual accounts to Companies House
- A Corporation Tax return to HMRC
- An annual confirmation statement
Failure to meet deadlines can result in penalties.
Payroll and PAYE
If you pay yourself a salary, your company must operate PAYE and submit real-time payroll information.
Dividend Documentation
Dividends must be properly declared, documented and supported by sufficient company profits.
This is an area where working with a specialist pharmacy accountant or medical accountant adds significant value.
Why Use a Specialist Medical Accountant?
Medical professionals face unique financial and regulatory challenges that general accountants often overlook.
- A specialist accountant understands:
- Healthcare-specific expenses
- IR35 risks in medical contracts
- VAT treatment for medical services
- The realities of locum and private clinical work
Nexus Accounting works exclusively with contractors and freelancers operating through limited companies, ensuring advice is always relevant and compliant.
By partnering with a specialist, you gain proactive tax planning, reduced administrative burden and peace of mind.
Key Takeaways for Contractor National Insurance
- Limited companies offer flexibility, credibility and tax planning opportunities for medical professionals
- Clinicians such as locum doctors, vets and vet nurses commonly operate through limited companies
- Proper setup includes Companies House registration, bank accounts and tax registrations
- Ongoing compliance is essential to avoid HMRC penalties
- Working with a specialist medical accountant ensures long-term success
FAQs
Can a locum doctor operate through a limited company?
Yes, a limited company locum doctor can operate through a limited company provided contracts and working practices meet HMRC requirements.
This structure is widely used in private and locum healthcare settings.
Do I need a specialist accountant for private healthcare?
Yes, using an accountant for private healthcare ensures your finances align with sector-specific rules, VAT treatment and IR35 legislation. Some general accountants may not understand these nuances so a specialist accountant is recommended.
How do I become a locum vet nurse using a limited company?
Understanding how to become a locum vet nurse via a limited company involves company formation, contract structuring and compliance with professional regulations.
By working with a specialist accountant, you can have support throughout the setup of your limited company and ongoing obligations in the future.
Elevate Your Financial Strategy with Nexus Accounting
Setting up a limited company as a medical professional is a strategic decision that can shape your financial future.
With expert guidance from Nexus Accounting, you gain more than just compliance, you gain a long-term partner who understands the realities of clinical contracting and private healthcare work.
Whether you’re a locum doctor, vet, pharmacist or healthcare consultant, Nexus Accounting provides specialist support tailored to limited companies only.
