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

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

With the new tax year looming, it is important to re-examine how the latest Budget – the first Conservative Budget for 19 years – will affect the dental profession. Having had time to evaluate the pending changes, it seems that dividend taxation could have the largest impact, especially those drawing dividends from their own limited company.

As dividends from UK shares are currently paid for with a 10% tax credit, previous years have presented incorporations with opportunities for reducing tax. From 2016, however, all dividend income will be treated as untaxed income and the current system will be replaced with a tax-free dividend allowance of £5,000 with higher taxes on income above that. What this ultimately means, is that practices will see a 7.5% increase in tax on any dividend income above the £5,000 tax-free allowance.

Although this is an aspect that will undeniably affect incorporated practices and their overall income, for those considering the decision to incorporate in the future, it could be pertinent to seek out professional financial advice to determine if it is the right decision to make.

In regards to dividend income received on Stocks and Shares ISAs and private pensions, however, thanks to the 1997 Budget, there will be no tax consequences introduced. This is good news for private pension protection, especially as tax relief claims will shortly be changing from £40,000 to £10,000 for dentists with incomes over £150,000 per annum.

The changes to employment allowance, income tax and inheritance tax are much more promising. Indeed, as from April, the employment allowance will be increased from £2,000 to £3,000 for all private practices. With the additional increase of the income tax higher rate threshold from £42,385 to £43,000, the Budget does present potential benefits to practices and dentists alike.

This is especially true where inheritance tax (IHT) applies. With the transferable main residence allowance set to gradually increase from £100,000 in April 2017 to £175,000 per person by 2020/21, this may prove to be a comforting thought for dentists and their families who have concerns about the effects of the Budget.

All in all, the Budget has revealed some interesting changes. While George Osborne and his fellow Conservatives expect to see public finances run at a surplus from as early as 2019, it would be prudent for all practices and dentists to stay cautious of what the future holds. Ultimately, until the changes take full effect it is uncertain what financial downfalls and benefits may occur, which means for now, preparation and calculation are very much advised.  If you are unsure of how the Budget affects you, contact money4dentists today.

For more information please call 0845 345 5060, email This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.money4dentists.com

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.

Inheritance Tax

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.

Buy-To-Let Scheme

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.

Rent-A-Room Relief

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.

Get Advice

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.

For more information please call 0845 345 5060, email This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.money4dentists.com

The Chancellor of the Exchequer, George Osborne, delivered his Autumn Statement and Spending Review today. There were items of interest to dentists as Jon Drysdale of PFM Dental explains.

Business rates

By the end of this parliament, local government will keep business rates revenue. Elected mayors will, subject to certain conditions, be allowed to raise business rates as the uniform rate is abolished.

Apprenticeship levy

A levy of 0.5% of employers’ wage bill is to be introduced in April 2017 but will affect less than 2% of UK employers.

Pensions

People collecting the new state pension from April 2016 will receive £155.65 per week.

Tax relief on pension contributions could be subject to further change and a decision was expected today but now seems to have been delayed until the Budget next March.

Buy to let and second homes

From 1 April 2016 people purchasing buy to let properties and second homes will pay an extra 3% in stamp duty.

Comment

Jon Drysdale, an independent financial adviser from Chartered Financial planners PFM Dental, says: “After much speculation, prediction and guesswork the Chancellor delivered a fairly benign Autumn Statement. There was little to worry high earners and dentists will be relieved that income tax rates remain unchanged. For once, pensions remain off the agenda, probably in anticipation of the consultation (underway) Osborne announced in the last Budget. This is due to report in 2016 - watch this space.”

For more information visit www.pfmdental.co.uk

Whatever you have planned for your retirement, there are many elements you need to put in place before you can enjoy your well deserved time off. Ensuring you have in place the most suitable pension scheme for you is just one of the necessary steps. With many options available, it’s crucial to understand the benefits of each, as well as your eligibility.

A welcome change for many pension holders came in the shape of the Pension Reform in April 2015, which increased flexibility and access to funds from the age of 55.

There is no limit on the amount permitted to be taken from pension pots once the policy-holder has reached this milestone age. However, only a quarter of these funds are tax-free so managing the other 75% needs serious consideration. Any amount removed from the pot beyond the first tax-free-quarter, will be added to other incomes and taxed at the relevant tax band rate – which could mean 45% for some professionals.

If the 25% tax-free lump sum is taken from the pot, there are several ways to make the most of the remaining 75%:

• Purchasing an annuity – providing a guaranteed income for life.
• Implement flexible retirement income/flexi-access drawdown – the 75% is invested in funds constituting a regular taxable income (as with an annuity). However, this option involves risk as income is relative to the performance of these investments and is therefore not guaranteed.
• Take small cash sums – treating the pension pot like a savings account. However, there is little protection for yourself or dependants and three quarters of each sum is subject to a tax deduction and possible additional administration charges and limits.
• Take the whole pot as cash –this option doesn’t offer the pension holder or any dependents a secure income for life, however, and there is also a risk of running out of money too quickly.
• Mix all of the above options – the best combination can be determined by retirement age, income objectives, health, size of the pension pot and dependants.

It’s important to consider all options carefully – depending on your personal circumstances your priorities may vary from someone else’s. Best thing to do before you decide? Get professional advice on keeping investments high and deductions low.

Specialist medical and dental accountants Lansdell & Rose offer business advice alongside regular tax planning and financial accounting. Visit www.lansdellrose.co.uk or call 020 7376 9333.

Taxation rules and business ownership regulations seem to be constantly changing and so keeping on top of the financial environment can seem like a never-ending task. 

Just when you think you have understood a new rule, another one is likely to be waiting for you in the Chancellor’s bag. As an owner of a dental practice, it is ultimately your responsibility to ensure your business, employees and own finances are organised correctly and so by spending time, often with an expert, can help to lessen the burden when the end of the financial year hits.

For the last tax year there were 21 new changes implemented by Her Majesty’s Revenue and Customs (HMRC), and now with a new government in place there will no doubt be further changes lined up.  A key part of the Conservative party’s manifesto was to encourage start up businesses and to help in the success of Small and Mid-size Enterprises (SMEs). The majority of dental practices will fall in this band and practice owners are expecting new policies to be introduced to the tax system at the next budget, in July that will benefit their business and employees.

The popular saying of “fail to plan, plan to fail” has never been so true than when applied to tax affairs. Any tax adviser or business accountant with sufficient experience will advise to keep abreast of the tax environment and to plan ahead. Maintaining your records to ensure they are accurate and up-to-date will save a lot of stress at the end of the financial year and minimise those few weeks of scrambling around for information.

Another way to stay in control is by consulting a professional. For example, an Independent Financial Adviser (IFA) can direct on how to maximise your income but minimise your tax payments well in advance of the deadline.  They are dedicated to spending time to understand the financial environment and then to advise on what changes you can make to your affairs to best serve you and your business. At money4dentists there is a team of highly experienced and professional IFAs that are dedicated to the dental industry, meaning that they are not only professionally qualified, but also highly knowledgeable about the intricacies of owning and running a dental practice.

With a firm understanding of today’s financial market and over 50 years of experience, money4dentists have a proven track record within this sector. They spend time to understand your professional and personal goals and to then advise on how best to achieve them.  Keep in control, plan ahead and disperse the stress; contact money4dentists today to see how they can help.

For more information please call 0845 345 5060, 0754 DENTIST, email This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.money4dentists.com

There are many costs when owning a vehicle such as fuel, repairs and maintenance, insurance, car tax, roadside assistance, depreciation, parking and lease payments. This leaves many dentists questioning the best possible way to purchase a car in order to minimise their tax bill. Lansdell & Rose have outlined and outlined factors to consider when purchasing a vehicle to maximise your tax relief.

The methods of tax treatment differentiate between different types of businesses and there are clear distinctions between how the tax of a vehicle works when trading as a sole trader or partnership, as opposed to a limited company. For most newly qualified doctors and dentists who are sole traders or in partnerships, the purchase of a vehicle can be represented as an asset to the business. Purchasing the vehicle through the business account would mean the company would gain full tax relief for all business use of the vehicle. An adjustment can then be made in the tax return to represent any proportion of private use.

For limited companies, a different approach applies and there are two main options. The first is that the company owns the vehicle and claims full tax relief, excluding fuel, as claiming tax relief on fuel may have further implications. The employee/director pays tax for their personal use for the vehicle. The second option sees the director purchasing the vehicle and claiming mileage at 45p per mile for the first 10,000 miles and 25p thereafter. The company consequently claims tax relief and the director incurs the cost of the vehicle through the mileage claim. It is important to note that traveling to and from work is considered private and not business use of the vehicle.

Deciding the most tax beneficial ownership of a vehicle is largely dependent on the type of vehicle and most notably its fuel emissions. If the vehicle’s fuel emissions are less than 95g/kg then it might be more tax efficient for the company to own the car. However, if the emissions are higher than 95g/kg you could receive better tax relief if you own the vehicle personally.

Lansdell & Rose are specialist medical and dental accountants and tax advisers who answer questions like these for dentists and medical consultants every day. If you have a question please contact us to ensure you maximise your tax relief before making key decisions for you and your business.

T: 020 7376 9333

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