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All that's new in the world of dentistry
NOV
25
0

A different story

A different story

 

Michael Lansdell is a founding partner at specialist dental and medical accountants Lansdell & Rose. As a chartered accountant, here he discusses the Chancellor’s Autumn Statement and how it could impact on dental practitioners and practice owners…

 

It could be the understatement of the century to say that we have had ‘quite’ a year here in the financial sector! We barely had time to draw breath after the result of the EU referendum when, on 8th November, the global political and economic landscape had another shock with the election in the US of Donald Trump. 

 

As far as the UK is concerned, not only do the people in charge now look different, the numbers do too. Back in March, ex-Chancellor George Osborne was still talking about his goal of turning the deficit into a surplus by 2020; by November his successor Philip Hammond had the (unenviable?) task of embracing the current reality by setting out careful fiscal targets that leave “significant flexibility to respond to any headwinds the economy may encounter”. The Office for Budget Responsibility (OBR) now forecasts the 2016/17 deficit will be £68.2bn, with 2019/20 producing a deficit of £21.9bn. Most worrying is that by end of this parliament, total government debt is forecast to be just short of £2 trillion!

 

Still, in the real world we have to press ahead with resolve and get on with the job in hand. For dental practice owners, this means trying to maintain a sustainable, successful business that looks after its employees and provides top-notch standards of patient care. So, in Mr Hammond’s first – and last – Autumn Statement, what were the stories that could impact on the dental sector?

 

First, there was some continuity. The previously announced staged reduction in corporation tax, from the current rate of 20% to 17% by 2020, will stay.

 

Employers would naturally be interested in any changes to National Insurance Contributions (NICs). From April 2017, the primary (employee) threshold and the secondary (employer) threshold will be aligned at £157 per week. Also, the tax and NI advantages of most salary sacrifice schemes will be removed from April 2017 (as previously proposed). Exclusions include packages relating to pensions, childcare and cycle to work schemes. Some arrangements will also be protected up until a specified date (the devil is in the detail, as ever). So, if you currently offer employees the opportunity to swap salaries for benefits you may decide to think again as they could end up paying the same amount of tax as individuals who pay for these things out of their post-tax salary. There will also be a call for evidence on tax relief for employees’ business expenses.

 

 

With regards to personal taxation and finance, Mr Hammond confirmed an increase to the personal allowance to £11,500 and the higher rate threshold to £45,000 for 2017/18. He also remains committed to a goal of a £12,500 and £50,000 (higher rate) personal allowance by 2020, he said. Of interest in the area of pensions, the Chancellor also announced proposed changes to the Money Purchase Annual Allowance (MPPA), a reduction from £10,000 to £4000. MPPA applies to anyone who has drawn income benefits under the current pension flexibility rules. The new guidelines are intended to limit the amount of pension income being ‘recycled’ as tax-relieved contributions (future consultation could result in some exemptions). There will also be other changes to the tax rules for pensions of people who move overseas, aligning them more closely with the UK’s tax regime; pensions/lump sums will be taxed to the same extent as they would have been domestically. Finally, the much anticipated further restriction on pension contributions by higher rate taxpayers did not materialise, so no changes there (mercifully)!

 

What about your other savings and investments? The band of savings income that is subject to the 0% starting rate will remain at £5000 during the next financial year. As previously announced, if you have an Individual Savings Account (ISA), the subscription limit will increase to £20,000.

 

This is just a brief summary of what dental practice owners may find interesting and/or applicable to their circumstances. Now more than ever, it is essential to enlist a specialist accountant when you are making any financial decisions, whether it relates to you or your business. In a year of shocks, now is time to be vigilant, be flexible, be organised and most of all to use the experts!

 

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

Or visit www.lansdellrose.co.uk

 

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2094 Hits
MAR
16
0

Positive news for dentists in the Budget

Positive news for dentists in the Budget

 

Jon Drysdale of Chartered Financial Planners, PFM Dental, assesses today’s Budget. Headlines may focus on the fragility of the economy and the need to further cut public spending The Chancellor offered positive news on personal finances which could benefit dentists.

 

·         Higher rate tax threshold to rise from £42,385 to £45,000 in April 2017. The majority of dentists are higher rate tax payers and will therefore feel the benefit. 

·         Many dentists employ their spouse and will take advantage of the tax-free personal allowance to rising to £11,500 also in April 2017. 

·         Annual Isa limit to rise from £15,000 to £20,000. This is a welcome increase to the alternative savings vehicle for those dentists no longer funding personal pensions (due to lifetime and annual allowance limits). 

·         Dentists trading as a limited company will welcome the changes to corporation tax, cut from 20% to 17% by April 2020. This may somewhat offset previously announced increases to dividend tax effective from April. 

·         Reforms to business rates will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April 2017. 

·         Dentists buying a practice with a freehold property are likely to be affected by changes to commercial stamp duty – 0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000. The freehold of a dental practice is often valued at less than £250,000 so this could be an advantage to many buyers. However, buying a larger freehold practice, especially one in the south east, could make you worse off.

 

The much anticipated changes to personal pensions and tax relief didn't transpire - but we already expected that didn't we?

 

A more detailed appraisal of the 2016 budget will shortly be available at pfmdental.co.uk

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4306 Hits

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