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Published: Thursday, 30 March 2023 07:38

Written by Peter Ingle

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The annual NASDAL benchmarking report is often held up as a health check on the profession’s financial well-being, and at first sight the latest report looks promising. But there are suggestions that the headline figures may not tell whole story. Despite this their latest figures were quoted by the Chief Dental Officer for England, Sara Hurley, in her presentation at the recent BDIA showcase.

NASDAL (National Association of Specialist Dental Accountants and Lawyers) is an association of accountants and lawyers who specialise in acting for and looking after the accounting, tax and legal affairs of dentists. Their ability to pool data from across the group members, allows them to give a picture based on a comparatively wide selection of practices located around the country, and covering the full NHS and private spectrum.

This latest round of benchmarking is derived from 2022 tax returns and accounts with year ends up to 5 April 2022. Overall there were Increased net profits across a variety of practices, and for both principals and associates. NASDAL pointed out that this was expected given that practices were closed for 2-3 months of the previous year due to lockdown. For principals average net profits increased form £152,414 to £168,826. In private practices the increase in average profit was from £143,418 to £178,513, with a smaller rise for mixed and NHS practices from £168,326 to £177,072 and £145,498 to £150,894 respectively.

For associates after a number of lean years there was an increase in average remuneration from £63,304 to £75,488.

Ian Simpson, Chartered Accountant and a partner in Humphrey and Co, which conducts the statistical exercise said, “The increase in profits was to be expected due to lockdown in the previous year. The increase was seen by all practices but NHS practices only saw a marginal increase compared with those experienced by mixed and private practices. In fact there was a differential of more than £25,000 in both cases. NHS practices cannot pass on increased material and wage costs and this may worsen over the next year - for instance, these figures have not taken into account inflation of over 10% and the massive energy price increases that have occurred more recently.” He pointed out that whilst welcome, the increase in associate income was reflecting a full twelve months of private work, compared to the enforced reduction in their working time the year before. He added, “As we look forward to the 2023 figures, we might expect to see NHS practice profits fall back further and a possible slowdown in the growth in private practice profitability.”

Heidi Marshall, of Dodd & Co, Specialist Dental Accountants and Chair of NASDAL observed, “It is important I think to view the 2022 figures in a wider context. Whilst there have been increases in the profitability of all practices, it is worth noting that NHS profits are still at a similar level to that of 15 years ago.”

For those with NHS contracts abatement had also taken its toll on profitability. In contrast private practices were less constrained, they could alter their fees and in some cases increase their capacity to take advantage of the unmet demand for treatment. Anecdotally there are suggestions that some of the private boost may have come from the inflexibility of UDA limited NHS practices, a bulge that may prove to be a one off.

Although the overall picture looks encouraging and was even seized upon by the CDO to remind her audience that they should be grateful for their remuneration, some industry observers are suggesting that it would be wise for both NHS and private practices, to “look below the surface.”  

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