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

NASDAL have taken a look at the Autumn budget from a dental perspective for GDPUK.com

Given the weakness of the Conservative Government as a result of the General Election and the tortuous negotiations with the EU over Brexit, it was perhaps no surprise that Chancellor Philip Hammond’s Autumn Budget should have avoided, if not evaded (!), making any major changes to the tax regime for the majority of businesses and individual taxpayers. However, Charles Linaker, a tax partner with UNW, which has a dedicated Dental Business Unit headed by NASDAL Media Officer, Alan Suggett, says that the Chancellor will still have to find ways of raising extra tax from somewhere and warns that dentists should be on their guard.

Those who are currently self-employed will recall that, in his Spring Budget earlier this year, Hammond announced increases to the rate of Class 4 NIC from 9% to 10% and then from 10% to 11%, which he then had to withdraw with indecent haste when it was pointed out that they breached a manifesto pledge made at the 2015 General Election. Had the Government been in a stronger position, those increases would surely have been reintroduced but the Chancellor confirmed that they will not now be implemented.

Similarly, dentists who operate via limited companies might have expected a possible reversal of the previously announced staged reduction in corporation tax rates, which many commentators thought could be implemented with relatively little controversy, not least because it would have been difficult for Labour to have opposed such a measure. But again, it was a case of no change as the Chancellor confirmed that 19% would remain as the rate for three years from 1 April 2017 and then fall to 17% from 1 April 2020.

On the personal tax side, Hammond could have decided to abandon, or at least delay, the previous proposals to increase the personal tax free allowance, but he confirmed that for 2018/19 this will increase from the current figure of £11,500 to £11,850 and that the basic rate band will increase for 2018/19 from the current figure of £33,500 to £34,500 (with the exception, it should be noted, of Scottish taxpayers).

Of course, it needs to be remembered that not everyone has the benefit of the full personal allowance. There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000, which is £1 for every £2 of income above £100,000. So for 2017/18 there is no personal allowance where adjusted net income exceeds £123,000 and for 2018/19 there will be no personal allowance available where adjusted net income exceeds £123,700.

Capital Gains Tax was also left untouched in so far as the main rates of 10% and 20% remained unchanged and the annual exemption of £11,300 for 2017/18 was increased to £11,700 for 2018/19. Moreover, for any dentists contemplating retirement in the near future, not only did the 10% rate applicable for Entrepreneurs’ Relief remained unchanged, it was announced also that the Government will consult on how access to Entrepreneurs’ Relief might be given to those whose initial holding in their company is reduced below the normal 5% qualifying level of shareholding as a result of raising external investment for commercial purposes by means of issuing new shares.

An early major casualty post-Election and pre-Budget had been HMRC’s much vaunted Making Tax Digital (“MTD”) programme whose implementation for income tax is now postponed until 2020 at the earliest – and later in the case of corporation tax. Only MTD for VAT will adhere to the original timetable from April 2019, which typically does not affect dental practices. Nevertheless, dentists would be well advised to plan on the basis that ultimately the proposed MTD requirement to file quarterly returns of income and expenditure to HMRC will be implemented.

A key argument from HMRC for the introduction of quarterly reporting under MTD is that it will help them close “the Tax Gap”. While HMRC estimates that it loses more than £1.5bn a year in tax through avoidance schemes (in which at least some dentists will have participated), the Department reckons that it loses in excess of £5bn a year through the hidden economy (i.e. payments made cash in hand) and that SMEs pay a total of £15bn less tax a year than it estimates they should.  

The statistical probability is that there will be some dentists in both of those categories and the Chancellor has allocated an extra £155 million in resources to HMRC in its continued war against evasion and avoidance. Given the Treasury’s need for increased revenue, an increase in HMRC enquiries over the next few years is on the cards and the dental sector can expect to bear its fair – or possibly even unfair - share of attention. You have been warned.

For further information on Nasdal (Specialists in dental business accounting and law), they can be found at - www.nasdal.org.uk.

Michael Lansdell is a founding partner of specialist dental and medical accountants Lansdell & Rose and a chartered accountant. Here, he gives a breakdown of the Autumn Budget 2017…

November 22nd was Budget day and therefore time for the ubiquitous articles on who were the ‘winners’ and ‘losers’ and what the Chancellor’s plans would mean for you. The heads up that the winning team was probably going to be rather smaller in number was the prediction from the Office for Budget Responsibility (OBR) that economic growth will be below 2 per cent for the next five years. For context, that’s one of the gloomiest forecasts that many can remember.

Philip Hammond faced a rather unenviable task, then, although no one was expecting any show-stopping statements either. Back in March, Hammond made a dramatic U-turn, scrapping the planned rises to National Insurance that he had announced in his Spring Budget just days before. For all sorts of other reasons, delivering a safe, steady and non-controversial Budget was always going to be the Chancellor’s intention.

Of course, there is always one thing that grabs report writers’ attention and this time around it was the decision to scrap stamp duty for first-time buyers on properties up to £300,000. We need to look behind the headlines to find out what will be most relevant to dental practice owners, though! Here’s what may impact on your financial planning for the year ahead…

Income tax

Both the personal and higher-rate thresholds were increased by around 3 per cent, which is in line with inflation, so no surprises there. For basic rate taxpayers, the personal allowance will increase to £11,850 and for those paying a higher rate the new figure will be £46,350. If you don’t want to see your personal allowance reduced, act now! If you make a pension contribution, or gift to charity, you can bring your income down to inside the new threshold.

Savings and investments

On the other side of the coin, anyone putting money into a pension saw the lifetime allowance increased from £1 million to £1.03 million (from 6 April 2018; no change to the annual allowance). If you are lucky enough to have funds that already exceed the £1 million limit, you might want to wait before you take your benefits. For those choosing an Individual Savings Account (ISA) or Lifetime ISA (LISA) the annual subscription limit will also remain unchanged, at £20,000 and £4000 respectively.

Capital taxes

A new 30-day payment window – between a capital gain arising and the payment of capital gains tax (CGT) – is now deferred until April 2020. With regards to inheritance tax, the nil rate band is to remain at £325,000. But don’t forget an important change due to start from 6 April 2018, when the inheritance tax residence nil rate band will rise to £125,000. If you don’t plan for this now, you could be significantly out of pocket when the time comes.

Property taxes and business rates

If you have been affected by the so-called ‘staircase tax’ (for businesses that occupy more then one floor of a building) you will be able to ask for your valuations to be recalculated. Another potentially relevant change was the switch to consumer price index (CPI) being bought forward to 1 April 2018. Also noteworthy is that the business rate discount for public houses with a rateable value of up to £100,000 will continue (subject to conditions) and non-domestic properties will be re-valued every three years following the next one, in 2020. In terms of planning, half of any interest for personal, buy-to-let borrowing will be limited to a 20 per cent tax credit from 2018/19, so make sure you understand if and how it will impact on you.

And finally!

The much-feted Making Tax Digital (MTD) scheme is still a work in progress – no business will be required to use it until 2019. When it has been shown to be successful, we can expect a roll out, but that won’t be until 2020 at the earliest. Getting prepared now won’t harm you at all though, as any business or individual within MTD will have to keep digital records and update HMRC quarterly. Maybe now is the time to review your record keeping.

The message? Plan ahead! A ‘steady-as-she-goes’ approach – while being meticulously organised and with the support of the right experts – will keep you focused and ready for anything as we embrace another year and whatever it may bring.

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

Or visit www.lansdellrose.co.uk

**** This article has been amended on the 15th of March ****

How will the Spring Budget affect you?

On 8^th March 2017, Chancellor Philip Hammond presented his first – and allegedly last – Spring Budget, outlining the UK’s plans for spending and borrowing as well as proposed changes to taxation. As always, the Budget was met with mixed reactions, though it would be fair to say that it was moderately upbeat considering recent events and the uncertainty surrounding Brexit.

Among other things, the Chancellor allocated extra money to health and social care services, free schools and addressed housing, transport and domestic violence issues, so the Budget did have many redeeming features. The fact that the UK was the second-fastest growing economy in the G7 in 2016 and the growth forecast for 2017 has been raised from 1.4 per cent to 2 per cent is also extremely good news. What many dentists will want to know, however, is how will the recent announcements affect them?

Firstly, the Government has imposed a new reform that will decrease the tax-free allowance on share dividends from £5,000 to £2,000; in other words, shareholders and company owners will benefit less from receiving a dividend. If you operate as an incorporated business you may well be affected by this, though it is likely the change will be relatively insignificant to your overall take-home.

Another key measure that was introduced to tackle tax avoidance and aggressive tax planning, is the plan to apply a 25 per cent transfer charge to qualifying recognised overseas pension schemes. Combined, these measures will make mitigating tax much harder moving forward. 

The good news is that personal tax-free allowance will increase this year to £11,500 from £11,000 as planned, and again to £12,500 by 2020. Disappointingly, business rates relief will remain the same, but after the amount of changes announced in 2016 we can’t be too shocked at the Chancellor’s decision. What he did say on the matter is that no business losing small business rate relief will see their bill increase by more than £50, though that will likely prove to be a small comfort for those hoping for bigger change.

Of course, there are other positives to have come out of the Spring Budget, including the fact that vehicle exercise duty rates and the HGV Road User Levy has been frozen for another year. With fears rising about potential increases in dental materials due to Brexit, no change in this area is the best that can be hoped for, because once their prices rise, so will yours!

Regulation concerning alcohol, tobacco and sugar should also be celebrated, as this could help to improve patients’ oral health. Tobacco, for instance, will rise by 2 per cent above Retail Price Index (RPI) inflation, which will cost patients an extra 35p for a packet of 20 cigarettes. As for beer, cider, wine and spirits, costs will increase in line with RPI inflation, which will result in a rise of 2p on a pint of beer, 1p on a pint of cider, 36p on a bottle of whiskey and 32p on a bottle of gin.

Perhaps one of the most victorious announcements of all is that the much anticipated sugar tax will go ahead as planned at a rate of 18p per litre where there is more than five grams of sugar per 100ml, and 24p per litre where there is more than eight grams or more of sugar per 100ml. Should this move prove successful, the profession will hopefully begin to see improvements in children’s oral health.

One of the bigger talking points to have come from the Spring Budget is the Government’s U-turn on plans to increase Class 4 National Insurance Contributions for self-employed people. Originally meant to increase from 9 per cent to 10 per cent in April 2018 and again to 11 per cent in 2019, it has since been dropped after the Chancellor faced backlash by Conservative backbenchers. The proposal to scrap Class 2 National Insurance in April 2018 is still set to go ahead.

For all of the drama that occurred afterwards, though, it wasn't a particularly groundbreaking Budget, nor will it have a huge impact on dentists. There will be fewer opportunities to mitigate tax moving forward, but with National Insurance Class 4 rates now set to remain the same, it is not as bad as it could have been. If you are thinking of maximising the legitimate tax reliefs available or simply want to find out more about how the Budget could affect you, get in touch with your Independent Financial Adviser.

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

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

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 second Budget of 2015 today, 8th July 2015. Following the promises made in the election campaign the main focus was, unsurprisingly, on cuts to welfare spending. Nevertheless, there were items of interest to dentists as Jon Drysdale explains.

Two tax measures will benefit most dentists

First, the higher rate threshold will increase from £42,385 in 2015-16 to £43,000 in 2016-17. This will undoubtedly benefit many dentists as the majority are higher rate taxpayers. The amount people will have to earn before they pay tax at 40% will increase from £42,385 in 2015-16 to £43,000 in 2016-17.

Second, the tax-free Personal Allowance will be increased from £10,600 in 2015-16 to £11,000 in April 2016. The tax-free Personal Allowance – the amount people earn before they have to start paying Income Tax – will increase to £11,000 in 2016-17.

Buy–to-let landlords lose tax break

Many dentists invest in buy-to-let property – a strategy that is already under pressure from decreasing yields. Landlords who currently receive tax relief at 40% and 45% on their costs – including mortgage interest – will be restricted to claiming 20%. This is to be phased in by April 2020 and puts further pressure on buy-to-let yields.

Incorporated dentists: dividend tax rates reformed and corporation tax reduced

The dividend tax credit (which reduces the amount of tax paid on income from shares) will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016. Tax rates on dividend income will be increased and are likely to affect those dentists who take income in the form of dividends. However, Corporation Tax will be cut to 19% in 2017 and 18% in 2020.

Pension reform

A major 'root and branch' reform of pensions was announced with a Green Paper for consultation to be published shortly. The implication is that tax relief on pensions may be reduced and tax-free access to pension pots further eased.

Those dentists with incomes over £150,000pa will be restricted to claiming tax relief on no more than £10,000 of pension contributions. This may make the NHS pension significantly less viable for dentists with this level of income.

Comment

Jon Drysdale, an independent financial adviser from Chartered Financial planners PFM Dental, says: “This budget didn’t contain too many surprises, although dentists who have incorporated will need to consider their remuneration strategy carefully due to dividend tax reform. Landlords were hit with the withdrawal of some tax relief and this may see buy-to-let yields fall significantly.

Jon Drysdale is an independent financial adviser for Chartered Financial Planners PFM Dental. He specialises in pension and wealth management advice exclusively for dentists.

For more information visit www.pfmdental.co.uk