On 25 November 2015, the Chancellor of the Exchequer George Osborne revealed the 2015 Spending Review and Autumn Statement. In the Summer Budget, Osborne declared it was time to become a country of higher wages, lower taxes and lower welfare. It would seem that the Review looks to reinforce this. However, how will this affect the dental profession, if at all?
Savings and Pensions
There are some aspects of the Autumn Statement that won’t affect dentists, but taxation on savings and pensions might. It is prudent to note that the band of savings income that is subject to the 0% starting rate will remain at £5,000 for 2016/2017 – a relevant point for those looking to achieve savings on tax through proactive mitigation.
In regards to individual savings accounts (ISAs), the limit will remain at £15,240. The Statement also announced that the list of qualifying investments for the new Finance ISA is to be extended in Autumn 2016 to include debt securities offered via crowdfunding platforms. As for the ISA savings of a deceased person, they will continue to benefit from ISA tax advantages during the administration of their estate.
The Review has also outlined plans to introduce legislation that will enable the pension tax rules on bridging pensions to be aligned with Department for Work and Pensions legislation. As for the pensions tax relief consultation that was launched in the Summer Budget 2015, the proposals will be published in the 2016 Budget.
Another aspect of the Autumn Statement that might affect dentists is changes to inheritance tax (IHT). The Autumn Statement has revealed that inheritance tax rules are to be backdated to 2011 to prevent pension scheme members from being charged for inheritance tax if they don't drawdown their monetary funds before their death.
For those looking to invest in additional properties, including buy to let properties and second homes, from 1 April 2016 they will have to pay an extra 3% in stamp duty. The money raised will be used to help those struggling to buy their first home. While this may be costly to some, it is certainly good news for the younger generation of dentists who are not yet on the property ladder. With announcements that a new Help to Buy equity loan scheme will lend 40% of the price of a home to those living in London, it is especially good news for those working and living in the capital.
Additionally, there has been an increase in rent-a-room relief, which is the amount of rental income that can be received tax-free by individuals renting a room or rooms in their main residence. From April 2016, the tax-free amount will be increased to £7,500 per annum.
All in all, the Autumn Statement was met with mixed reactions and certainly provides food for thought. For dentists specifically, there is much to be considered, but there is nothing that is especially concerning. If you are unsure what the Review might mean for you and your practice, it is always beneficial to seek out the advice of trusted financial professionals.