On Thursday 5th December, Chancellor George Osborne delivered his Autumn Statement to Parliament. In his speech the Chancellor announced that the UK economy is to grow 1.4% this year – more than double the 0.6% predicted in March.
Though the recession has certainly been hard on many businesses, we are now starting to turn the corner and many of our clients are seeing their books filling up. As such we are in a position now where dentists can look to the future with some amount of confidence, as the economy starts to grow again, and the Chancellor has set out a number of small, but not insignificant, changes for the coming year.
ISA allowances will increase from £11,520 to £11,880 in April 2014. This is a relatively small inflationary increase, but one worth using. Any increase in tax relief is a good thing, and ISAs are a very tax-efficient investment. Note that half of this £11,880 can go into cash funds. This gives the guarantees and flexibilities to withdraw like a regular bank account but all the interest accrued is tax-free. It’s amazing how many dentists do not maximise their cash ISA allowances each year, and so are not taking full advantage of a very simple method of saving in a tax-efficient way.
Taxation and property
Tax avoidance was a key area of focus in this year’s Autumn Statement, and the Chancellor emphasised a renewed focus on employees posing as the self-employed. While it still remains to be seen how this will play out in dentistry, if you are unsure as to your employment status, and whether you are working within the legal framework set out by the HMRC then you should seek specialist financial advice.
Another interesting development in the Autumn Statement was the announcement that non UK-residents are to pay Capital Gains Tax on selling UK residential property. While this doesn’t necessarily directly affect dentists, it will hopefully deter more overseas investors and so in the long term, impact upon the inflated housing market in the UK. This may benefit first time buyers in the long term, and should level out the playing field when it comes to investing in property.
The Government’s ‘small business rate relief’ scheme has been extended for a further year, while business rates have also been capped at 2% in 2014. Businesses can now also pay in 12 monthly instalments to help spread the burden, and aid in better financial management going forward.
These changes impact on 99% of dental practices in the UK, as nearly all practices are classed as ‘small businesses’ under HMRC guidance. It is quite surprising to note here that many dentists still don’t claim what they are fully entitled to in terms of business rates relief and other related schemes. For example if you own your dental practice freehold you can claim capital allowances on wiring, cabling, sanitation and so on up to a value of £250,000. This isn’t some obscure tax avoidance scheme – this is just following the HMRC rules. If you buy a dental chair then you can take account of this in your finances. After all, it’s a business expense, and a Chartered tax advisory firm can help you to do this.
Further points of note
The Chancellor’s Autumn Statement is weighty document. At 130 pages, there are a lot of points covered, and some more relevant to dentists than others. To help you fully understand the impact of the Autumn Statement, and make the most of your finances, it can pay to use to services of a specialist Independent Financial Adviser (IFA), with experience directly within dentistry.
There are a number of companies out there, but not all are experienced in the unique needs that the dental profession brings. As a dentist you will likely earn a large amount of money over the course of your career. With the services of a specialist IFA you can make your money go further and work more efficiently for you.
For more information please call 0845 345 5060,