Leaving the NHS to work in the private sector
Making the move from NHS dentistry to private practice is as daunting as it is exciting.
Whether you’re beginning with your own patient list or planning a full practice conversion, private dentistry can mean a better work-life balance and a sense of empowerment that comes from taking back control of your career and earnings.
But as with any change, there is an element of risk. That’s why it pays to be prepared for the potential impact of this move on your finances – and to make sure you have the right protection in place.
Knowing how to structure your business
Depending on the setup of your practice, converting to private work could lead you (or you and your partners) to form a limited company, rather than being self-employed.
If you wish to share your income with your spouse, partner or children, a limited company may be a more appropriate structure for your business.
There are many benefits associated with setting up a limited company, including tax savings. This is because you’re able to cover certain costs directly from your business, rather than from your personal finances.
A director’s loan is also an option if you wish to take money from your practice’s accounts that cannot be classed as salary, dividends or expense repayments.
It's important to remember that forming a limited company can impact other areas of financial planning, which is why it's a good idea to speak to a Specialist Financial Adviser if you decide this is the right move for you.
Tax treatment depends upon your individual circumstances and may be subject to change in the future.
Your personal pension and retirement options
Switching from NHS dentistry to private practice will almost certainly impact your retirement plans.
Your NHS pension contributions are likely to decrease or stop completely, depending on whether you choose to reduce your NHS commitments or convert to private practice on a full-time basis.
Making sure you have an alternative retirement vehicle in place (for example, a personal pension or investment portfolio) means that a proportion of your hard-earned cash can be used as a separate retirement nest-egg.
It’s worth remembering that you can still be a member of the NHS Pension Scheme, even when you transition to private dentistry. This means that any pension pot you have accrued up until the point you leave the NHS will be available to you when you are ready to retire.
Protecting yourself and your business
As an NHS dentist, you’ll be entitled to claim sick pay if you’re unable to practice through ill health.
If you’re planning to leave the NHS completely, you’ll no longer be entitled to this support. This is where an income protection policy can help, providing monthly benefits to make sure you can meet all your regular outgoings if you’re unable to work.
The NHS Pension Scheme also provides death in service benefits, as well as a dependent’s pension that is paid to your surviving spouse, registered civil partner or a nominated qualifying partner when you pass away.
Leaving the NHS means that your entitlement to these benefits will change. For example, if you’ve been a member of the scheme for less than two years and you die within 12 months of leaving it, there will be no dependent’s pension payable.
By taking out a life assurance policy, your family will be guaranteed a lump-sum payout when you pass away. This sort of cover can make a difficult time that little bit easier and help to take care of the costs that soon stack up.
It’s also worth thinking about how to protect your business should the worst happen – for example, if a partner of your practice becomes critically ill or one of your key employees passes away. Partnership protection and key person insurance can provide crucial financial support should these circumstances arise.
Wesleyan Financial Services is a broker and insurance products are provided by a number of select insurers. Limits, exclusions and charges do apply.
Patient membership plans
It’s important to be aware that moving to private practice will also impact the finances of your patients. Most will be used to paying a set amount for their treatment under the NHS, which means they may need an alternative payment option to spread the cost of their routine dental care.
Introducing a patient membership plan could be a good way to support your patients through this change, making sure their payments are both consistent and manageable.
Finding a reputable provider of dental membership plans (such as Practice Plan) can help to simplify this process, enabling you to assess your situation while remaining in control at all times.
If you’re planning to introduce private treatment options with a higher price point (for example, dental implants or cosmetic procedures), you may also need to explore your patient financing options.
Dental financing companies such as Medenta can provide a range of plans that allow patients to break down large treatment costs into smaller, monthly payments – meaning increased treatment uptake without having to compromise on your prices.
Funding for practice refurbishments
If you’re considering refurbishing your surgery ahead of making the switch to private practice, it’s important to assess whether you have enough capital to make your desired improvements.
Whether you’re looking to spruce up your consulting rooms, introduce new signage or invest in the latest dental equipment, a business loan may be the right funding solution for your practice needs.
Finding a provider that offers business loans tailored to dentists means you can borrow the money you need for your new look and simply pay it back each month – easing the pressure on your cashflow as you transition to working privately.
Seeking specialist advice
If you’re considering exploring your options for private practice, it’s wise to make sure your financial foundation is as secure as it can be.
You may find that your income increases when you begin working privately, which is why it’s a good idea to review your finances with a Specialist Financial Adviser from Wesleyan Financial Services to make sure your extra earnings are optimised for growth.
The support of an adviser with in-depth knowledge of the dental sector can also help to identify the financial opportunities and pitfalls associated with the switchover. This means you can spend your time focusing on other areas of your practice, and preparing your colleagues and patients for the change.