Private Practice for UK Doctors & Consultants
Private practice offers consultants and specialist doctors an opportunity to supplement NHS income, gain clinical autonomy and build long-term wealth. Yet moving from salaried NHS work to running your own practice introduces a new set of financial, regulatory and operational considerations. This hub brings together our guidance on every stage — from initial setup through to growth and exit planning.
Setting Up a Private Practice in the UK
Before seeing your first private patient, several foundational steps need to be in place. You will need to register with the relevant private medical insurers (such as Bupa, AXA Health and Aviva) to appear on their practitioner directories and receive direct settlement of fees. Applying for practising privileges at one or more private hospitals gives you access to theatres, consulting rooms and diagnostic facilities. Each hospital has its own credentialing process, typically requiring evidence of GMC registration, indemnity cover, appraisal completion and specialist training.
You must also notify HMRC that you are receiving self-employment income and register for Self Assessment if you are not already in the system. Opening a dedicated business bank account keeps practice income and expenses separate from personal finances, simplifying bookkeeping and tax returns. Many consultants start by practising as a sole trader, which is the simplest structure, and review whether a limited company would be more tax-efficient once fee income reaches a meaningful level.
Structuring Private Practice Income
How you structure your private earnings has a direct impact on your tax bill. As a sole trader, all practice profits are added to your other income and taxed at your marginal rate — often 40% or 45% for consultants with substantial NHS salaries. Operating through a limited company allows you to pay yourself a tax-efficient combination of salary and dividends, potentially reducing the overall rate to below 35% on retained profits.
The decision to incorporate should weigh up several factors: the level of profit you intend to retain in the business, the administrative burden of running a company, the impact on NHS pension contributions and whether you plan to employ staff or associates. Consultants in group practices may prefer a partnership or LLP, which offers liability protection while keeping the tax position transparent. Whatever the structure, an annual tax-planning review ensures you are extracting income in the most efficient way as rates and allowances change.
VAT Considerations for Private Practitioners
Most medical services provided by a registered medical practitioner are exempt from VAT under UK law, which means you do not charge VAT on consultation fees, surgical procedures or diagnostic services. However, VAT exemption is not universal. Medico- legal reports, cosmetic procedures that are not clinically necessary, expert-witness fees and certain occupational-health services may be standard-rated at 20%.
If your taxable (non-exempt) turnover exceeds the VAT registration threshold — currently £90,000 — you must register for VAT and charge it on those supplies. Because exempt income does not count towards the threshold, many doctors are surprised to find that only a portion of their total fees are relevant. Partial exemption rules also limit how much input VAT you can reclaim on costs that relate to both exempt and taxable activities. Getting the VAT position right from the outset avoids costly retrospective assessments and penalties.
Insurance and Indemnity Requirements
Adequate indemnity cover is a GMC requirement and a practical necessity. For private practice, you need cover that extends beyond the state-backed CNSGP scheme, which only applies to NHS GP work. The main medical defence organisations — MDU, MPS and MDDUS — offer discretionary indemnity, while commercial insurers provide occurrence-based or claims-made policies. The right choice depends on your specialty, procedure mix and risk profile.
Beyond clinical indemnity, consider public-liability insurance (if you own or lease premises), employers' liability insurance (mandatory if you employ staff), cyber-insurance (increasingly important as practices hold digital patient records) and income-protection cover to replace earnings if illness or injury prevents you from working. Premiums for all insurance directly related to your practice are tax- deductible. Reviewing your cover annually — especially after expanding into new procedures or taking on associates — ensures there are no gaps.
Financial Planning and Growth Strategies
A private practice is a business, and sustainable growth requires financial discipline. Key metrics to track include fee income per session, consultation-to-procedure conversion rate, debtor days (how quickly insurers and self-pay patients settle invoices) and overhead ratio. Building a cash reserve of at least three months' operating costs protects against the income volatility that many new practices experience.
Growth strategies range from expanding your insurer panel and building GP referral networks to investing in marketing, hiring a practice manager or bringing in associate consultants. Each step has financial and tax implications — employing staff triggers PAYE, auto-enrolment pensions and employment-law obligations, while leasing premises commits you to fixed costs. A long-term financial plan, reviewed annually with your accountant, keeps growth aligned with your personal income goals, pension strategy and eventual exit plan, whether that is selling the practice, winding down gradually or transitioning to a group model.
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