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24 March 2011

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I’ve heard some practices let GPs put aside money themselves towards their tax bills, rather than saving up the tax bill at the practice end. What are the advantages?

The advantages are that this can be cheaper because you get a deposit rather than a short-term facility. Your GP can put the money in her current account mortgage account because most banks offer an offset mortgage account so she can pay in monthly instalments, but she would need to check certain terms with her lender for any annual withdrawal fee to ensure this does provide a benefit.

For example, if she pays £1,000 a month for her anticipated tax bill she will benefit from this sum, offsetting her mortgage interest. She would, however, need to check with her lender if there is an annual withdrawal fee and that this doesn’t exceed the interest benefit accrued.