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I was intrigued to read the comments by Burrells Accountancy Ltd on the article Lovely smile.
We have been in correspondence with the Dental Practice Board (DPB), see below, and they confirm that there are no adverse consequences on the dental practitioner’s NHS pension as only the contract holder changes on incorporation of the practice.
The principal remains a performer and his NHS pension record gets credited with the NHS work he does. The only downside appears to be no credit for work done by a vocational dental practitioner (VDP).
We asked for the following information relating to a sole trader transferring his trade to a limited company and received the replies appended below.
Q1. Does his company become the performer?
A. The company is the contract holder. Any practitioner at the surgery becomes a performer.
Q2. What figure do we report as his actual net pensionable earnings for the year on the ARR (the annual reconciliation report)? 43.9% of his baseline payment or the income he takes out of the company either as salary or dividend?
A. Each practitioner is entitled to 43.9% of their gross NHS earnings as pensionable. Therefore the net pensionable pay is 43.9% of gross pay.
Q3. Is his NHS pension adversely affected in any way by making use of a limited company?
A. The only drawback is that service costs for a VDP are only paid to the contract holder. So if the contract holder is not an individual then the 43.9% of those service costs cannot be allocated as pensionable earnings to anyone.
We also asked the same questions where a sole trader dentist has an associate who trades through a limited company and were advised that the answers would be the same as above.
Finally, in response to our request for any other advice on using a limited company by dentists, we were advised that: ‘any other advice you require should be directed to your primary care trust (PCT). It is they you are in contract with, not the BSANHS (Business Services Agency at the NHS) Dental Service. We are only the paying agent for the PCT and pensions administrators for all NHS dentists.’
I trust that this information will be of interest to readers.
PK Shah ACA, CTA, FPC
