Tax planning for pharmacies

by | Nov 6, 2018 | Blog

Mistakes are not an option for pharmacists, where the stakes are high and sometimes a matter of life and death. 

At Dunkley’s, director Matthew Dobbins heads up an expert team that supports individuals and businesses operating in this sector – not just in Bristol, but around the UK.

Just as you care for the people in your pharmacy, we take the time to learn about your business and know the ins and outs of the legislation you need to follow. 

Whether you operate one business or several, our accountants can help you remain profitable at a time when the NHS continues to be under financial pressure. 

VAT and bookkeeping

Given the nature of your business, it’s more than likely to be registered for VAT as your annual turnover will probably exceed £85,000 a year.  

This can be a tricky area for pharmacists to successfully navigate without expert guidance, particularly as three VAT retail schemes  usually come into play. 

One of the most common issues surrounds the apportionment scheme, which can assume you make same profit margin on standard and zero-rated product lines. 

Dispensing pharmacists would need a good margin on standard-rated product lines and a poor one on zero-rated lines to make this scheme work for them.

We understand the complexities of VAT and can guide you through every aspect – including Making Tax Digital – while also taking care of your bookkeeping needs and preparing your annual accounts. 

Payroll and auto-enrolment

Pharmacists will need to either manage or delegate payroll duties, which include workplace pension legislation for any eligible staff you employ. 

For employees to be eligible for auto-enrolment, they are usually over the age of 22 and earning more than £10,000 a year. 

Payroll is often an onerous and time-consuming task for business owners to handle, and part of our service is to take these duties off your hands to ensure you remain fully compliant. 

Selling your pharmacy 

Selling a pharmacy will usually be liable for capital gains tax (CGT), although there are exemptions in place to reduce the amount you pay. 

For instance, entrepreneurs’ relief may reduce the rate of CGT when you sell your business from 28% for higher-rate and 18% for basic-rate taxpayers to a flat 10% in certain circumstances. 

Entrepreneurs’ relief allows gains of up to £10 million on business sales to be taxed at 10%, while those who own more than one business can claim this relief up to a lifetime limit of £10m. 

For those who trade through a company, selling shares in the company that owns the business would usually be more tax-efficient that relying on goodwill or shareholders retaining ownership. 

Get in touch

Handling the tax affairs of pharmacists is a specialist area for our experts, who offer tax compliance, advice on business plans, VAT, online accounting and much more.  

To find out more, get in touch with our director Matthew Dobbins, who can offer impartial advice or handle all the complexities if you work in this sector. 

What can we do for you?

If there’s anything you’d like to know about Dunkley’s, we’d love to hear from you.