JUL
23
0

What could the new Labour government mean for dentistry?

iain_stevenson Iain Stevenson is Head of Dental at Wesleyan Financial Services and has over 28 years of experience working in financial services.

What has the new Labour government announced so far that could potentially impact financial planning for dentists?

If we consider what has been announced so far, Labour has said it is not planning to raise income tax, National Insurance, VAT and corporation tax. On the face of it, this is a good thing, although, on the other hand, this needs to be balanced against the fact that income tax thresholds are being held and will remain frozen until 2028. This means that more people will start paying tax in the first place and others will be dragged into higher tax bands. Labour has also stated that their plans to end the VAT exemption on private school fees will go ahead – this change may have a significant impact on many of our dental clients whose children attend fee paying schools.

What might change in the future?

At present there is a degree of speculation regarding what was notably absent from Labour’s manifesto and what could therefore potentially change in the future. For example, there has been no specific mention of capital gains tax – this could possibly be an area for reform in the future. Capital gains tax, as we know, is not a tax on income, it's a tax on assets and the sale of assets – something which could perhaps impact the net returns received from the sale of a practice.

Then there is the age-old challenge around pensions – for the 35 years that I have been in this business, pensions have always been a potential target for change and for governments to try and do something in a different way. We know that the lifetime allowance - the maximum amount you're allowed to have in a pension pot or an accumulation of pension pots at retirement - was withdrawn last year, a welcome change that helped to encourage people to continue to save and look after themselves in the long term. Labour has confirmed that it will not reinstate the lifetime allowance, which is good news for dentists; however, another notable omission from the manifesto was around the annual allowance - the amount that you are allowed to contribute to a pension each year. If we look at pensions overall, they're extremely tax efficient and offer a good method of saving – this also means though, that some of the tax allowances may potentially be a target for change, such as pension tax relief to give an example.

The tax-free pension commencement lump sum - this allows you to take a certain percentage (currently 25%) out of your pension as a tax-free lump sum – is another area that has been discussed as a potential for change in recent years. Nothing has been announced however, and this is only speculation. I am hopeful that this government encourages people to save and look to maintain the tax advantages of pension planning and of retirement planning.

What sort of changes would you welcome from the new government?

I would be delighted to see changes made to ISAs to encourage people to invest more, especially so for younger people. If we think of young dentists who are just coming into the profession and how hard they have studied to get started – it would be wonderful to see some sort of scheme specifically for these dentists, to help them save and to encourage them to build solid foundations for their future as well.

What would you encourage dentists to think about now?

I would encourage dentists to look after themselves in the short, medium, and long-term and to not delay making decisions, with regard to their financial planning, in the event that things may change in the future.

My fear is that while there's uncertainty at the moment around what the new government might do, some people may choose to do nothing and that in itself, in the long run, could be even more damaging. By choosing to wait until inflation comes down, until interest rates come down or until the next budget for example, we miss opportunities; and when the autumn statement does come around, it’s likely that other unanswered questions will transpire. There will always be something else, a war that we cannot control or an economic challenge that we weren't expecting, or another reason to delay and before we realise, six months becomes one year, one year becomes five years and so forth, and then the opportunity has gone.

I would encourage dentists to take a step back and use this as a time to reflect and consider the following: What am I trying to do? Am I doing the best I can over the short, medium, and long term?

Speculating over what could happen is an interesting discussion, but it can also create fear. Therefore, we need to be careful that we don't over speculate and just assume that certain things are going to happen. We need to be careful that we don't just keep putting things off and ensure that we continue to make good financial, well-informed decisions.

Bear in mind that the value of investments can go down as well as up and you may get back less than you invest.

Tax treatment depends on individual circumstances and may be subject to change in future.

For further support and guidance to plan on financial planning, speak to a dental Specialist Financial Adviser at Wesleyan Financial Services by booking a no-obligation financial review or calling 0800 316 3784.


About: Iain Stevenson is Head of Dental at Wesleyan Financial Services and has over 28 years of experience working in financial services. Under Iain’s guidance, Wesleyan Financial Service’s Dental segment helps to support dentists, their families, and their practices with financial planning to secure their financial future.

Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority. Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Calls may be recorded to help us provide, monitor and improve our services to you.

  690 Hits
690 Hits
APR
15
0

The 2024/25 financial year - what has changed and what does this mean for dentists?

Dental Specialist Financial Adviser, Paul Griffiths, for Wesleyan Financial Services, outlines the new tax rates, new allowances and other changes that have come into effect and explains what these will mean to dentists.

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  1059 Hits
1059 Hits
JAN
21
0

Estate Planning – How to make a start

Specialist Dental Financial Adviser, for Wesleyan Financial Services, Stephen Barry, shares his insights on estate planning and how planning sooner rather than later can be beneficial.

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  1287 Hits
1287 Hits
MAR
14
0

Spring statement analysis

Spring statement analysis

 

Michael Lansdell is a founding partner of specialist dental and medical accountants Lansdell & Rose and a chartered accountant. Here, he gives an overview of Philip Hammond’s first Spring Statement, and the key points for dental practice owners…

We had two Budgets and three Financial Bills in 2017, which for many, was more than enough! The Spring Statement lasted a grand total of 25 minutes, and was essentially a review of the public finances. It was also an opportunity to publish consultations before any announcements in the Autumn Budget.

So, nothing headline grabbing, but here’s a glance over the Spring Statement and how it may relate to your business.

VAT

From April, the VAT threshold will remain at £85,000 for the next two years, as per a previous announcement. Mr Hammond said he would consult on whether growth could be incentivised by looking again at how VAT is structured.

Digital payments

Payments/settlements systems (including the Bank of England’s) are to be renewed in order to harness the power of the latest technologies. The government pledged its support to these changes, and it will be consulting on them.

On a related note, views will also be sought on how online platforms could help users comply with their tax obligations.

Entrepreneur’s relief

If an individual now owns less than 5 per cent interest in a company, because the company has issued trade to raise capital, they should be able to claim Entrepreneur’s relief, says the government.

Business rates

Views had previously been sought on this topic. It was announced that the first of more frequent, three-yearly revaluations for business properties would be in 2021.

Self-funded work-related training

Have you – or a colleague – undertaken this? Well, the government is going to look at how tax relief can be extended and how the system can be both simplified and protected from misuse.

Coming up in April…

No new tax measures were introduced, but some previously announced changes are coming into force in April. The personal allowance is rising to £11,850 (for basic rate, to £34,000 and higher rate, £46,350). This excludes Scotland, who will have five new tax bands for 2018/19. If you are on a higher rate in Scotland, this isn’t great news as the threshold is going to start at £2,920 below the rest of the UK. As previously announced, the dividend tax allowance will be reduced to £2,000.

The national insurance contributions (NICs) threshold is also increasing by 3 per cent and Class 2 NICs will now be phased out for 2019/20.

If you have a company car, tax will rise for all by the highest emission vehicles.

The residence nil rate band for Inheritance tax (IHT) will rise; the main rate band will remain unchanged. There could be changes afoot by the Autumn Budget, however, a review of IHT conducted by the Office of Tax Simplification is due to report around then.  

As for pensions, the minimum contributions for workplace pensions under automatic enrolment will increase. The lifetime allowance will rise in line with inflation (it’s been on a downward path since 2012).

Finally, both income tax and NICs will apply on all payments in lieu of notice (PILONs) in 2018/9.

If you want specific data, or clarification, contact Lansdell & Rose. We can help your practice to stay ticking away efficiently and profitably during the next financial year and beyond.

Other dental accountants also available. Nasdal.

 

Lansdell & Rose on 020 7376 9333,

Or visit www.lansdellrose.co.uk

  3482 Hits
3482 Hits
JAN
05
0

Tax-free opportunities knock - Michael Lansdell

New allowances mean that there is now the opportunity for some people to have up to £17,000 of savings income, tax-free. Along with the new £5,000 dividend allowance, that’s potentially up to £22,000 of tax-free income. So, how can you get on board?

The defined order for taxing income can make a difference. Earnings/non-savings income (such as rent) is taxed first. This is followed by savings income, then dividends.

The 0 per cent starting rate band for 2016/17 is £5,000. This is given on savings income as long as it does not exceed the personal allowance of £11,000. So if you have earnings/non-savings income of up to £11,000, you could receive £5,000 of savings income, tax-free. Dividends income does not affect your entitlement to the starting rate tax band. This gives you the option of having thousands in dividends, but also continuing to enjoy £5,000 of savings income taxed at zero.

April 2016 saw the introduction of the new personal savings allowance (PSA).
A basic-rate taxpayer will be able to earn up to £1,000 in savings income, tax-free; for a higher rate taxpayer this figure is £500. Using the PSA, a basic-rate taxpayer could take advantage of the £11,000 personal allowance, plus £5,000 taxed at 0 per cent, plus the £1,000 savings income allowance. This means a potential total of £17,000 in tax-free savings income.

Not only is basic-rate tax no longer deducted at source on bank/building society accounts since April, but the first £5,000 of a person’s dividends income is also tax-free. Why not look at how family members can be used to maximise the benefits available? For a couple, one partner may be lower earner or have less in pensions. If they hold the assets that generate the savings income and dividends, this can help the family qualify for the new opportunities.

Everyone wants to know how to maximise their tax efficiency and enjoy tax-free income. With the pressures of being a dental practice owner, it pays to get expert advice so you can get on with the business of providing high-quality care and a great place to work. Lansdell & Rose are specialists in providing tax-planning advice to dental and medical professionals, as well as business advice. Get professional support to maximise your tax efficiency – there are opportunities for tax-free income out there if you know where to look.

 

To find out more, call Lansdell & Rose on 020 7376 9333,

Or visit www.lansdellrose.co.uk

 

 

  3345 Hits
3345 Hits
MAR
10
0

Beware dividend tax changes

Beware dividend tax changes

 

If you are incorporated as a limited company or incorporation is something you are considering here’s important information about dividend tax changes in April 2016. Changes also apply if you are an associate trading as a limited company.

The majority of earnings are likely to be paid out of the company via dividends. Currently, UK dividends are paid with a notional 10 per cent tax credit; as of April 2016, the dividend tax credit is being scrapped and replaced with a tax-free dividend allowance of £5,000 per year for each shareholder. Additionally, the income tax attributable to dividends is increasing by 7.5 per cent within each income tax band, including the basic rate band – which was previously tax free.

Hayley Hudson ACA, Manager for PFM Townends LLP, says: “There are a number of beneficial reasons to incorporate as part of a tax planning scheme, however, there are many factors to consider. Incorporation should be analysed on a case-by-case basis to ensure it is indeed the best course of action.

“At PFM Townends we always proactively discuss all the advantages and disadvantages with our clients.”

 

For more information visit www.pfmdental.co.uk

  4261 Hits
4261 Hits

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