4 minutes reading time (740 words)

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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