Budget 2024: Some Dental Angles
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- Published: Wednesday, 30 October 2024 19:13
- Written by Guy Tuggle
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It‘s finally been delivered. After all the waiting, the interminable debates over what constitutes a ‘working person‘ or the impact of the withdrawal of winter fuel payments from all but the least well off pensioners, Rachel Reeves has ended all speculation and set the country on a new course.
The undisputed winner was the NHS. A whopping increase in capital investment (+£3.1bn), a move to reduce reliance on hospitals with medicine in the community, the replacement of analogue with digital and greater emphasis on prevention over cure will be warmly welcomed by health professionals and the patients who depend on them.
The big loser, at least in money terms, is business, including those dental practice owners who are facing higher tax bills, in particular via Employer National Insurance contributions.
Speaking to GDPUK, Michael Lansdell, Director of dental accountants Figurit said three key announcements would impact on practices.
"An increase of 6.7% in the national minimum wage from April 2025 will increase the payroll bill for those practices who are paying some staff at or just above the minimum wage, which will drive up practice overheads at a time when it is difficult to pass additional costs on to patients by way of increases in dental fees" Mr Lansdell said.
Commenting on the increase from April 2025 in the rate of employer national insurance from 13.8% to 15%, and a reduction in the annual salary per employee at which employer national insurance starts from £9,100 to £5,000, Mr Lansdell observed "The first £5,000 per year of total employer national insurance is relieved by the annual employment allowance which has been around for some time; this will be increased to £10,500 which will cover the additional national employer contributions for the smallest businesses.
Whilst that pill may have been sweetened, Mr Lansdell said the changes to Capital Gains Tax would cost practice owners who sell their business.
"An increase from 10% to 14% next year, and to 18% in the year after on the rate of capital gains tax that a practice owner pays on sale of their practice on the first £1 million of gain is a substantial increase in percentage terms – the tax will be 40% more on sales next year than it would have been this year, and 80% more on sales in the following year than it would have been this year" said Lansdell.
GDPUK asked some further questions to Mr Lansdell:
With the increase in employment allowance, which counterbalances the rise in Employers’ contributions, at what team size will dental practices will be paying more in NI?
He answered: "I have done some work on this. Please note these numbers are very rough. A full-time employee over the age of 21 will now be on a minimum salary of about £25,000. The average UK salary is around £30,000. For employers with about 6 employees on the UK average salary, or employers with about 7 employees the UK minimum wage, they will be largely unaffected by the increase in employers NI, as the increase in the rate/reduction in the threshold will be approximately matched by the increase in the employer allowance. Employers with fewer employees than this (with the assumed salary or either UK average salary or UK minimum wage) will actually be better off, whilst those employers with more than this (with the assumed salary or either UK average salary or UK minimum wage) will be worse off. Clearly the greater the number of employees, and the greater the size of the salaries, the more worse off the employer will be.
Another question: In Michael’s experience, how many small business owners were employing close ones, spouses etc, at under £9000pa doing say, bookkeeping. Now the threshold for NI has been reduced, will this affect everyone or, what percentage of practices? How much will this cost those people and the practice with say one part time book keeper?
The answer was: "Leaving someone on the payroll at £9,100 that was previously free of NI contributions will now pay employer NI of £615 assuming that the employment allowance of £10,500 per year has been used on other staff. I don’t have numbers for this, but I’d say at least half of our clients employ people on this basis.
The Department of Health and Social Care (DHSC) is to receive an extra £22.6 billion for day-to-day spending over the next two years, £21bn for NHS England.
Out of this investment there will be a £3.1bn increase in capital investment for 2025-26 compared to 2023-24, up to £13.6bn overall. £1.5bn of this has been earmarked for capital funding for new surgical hubs and diagnostic scanners, plus £100 million will be used for upgrading 200 GP estates across England.
To reduce pressure on A&E services, £26m has been set aside to open mental health crisis centres.
What was not mentioned in the Chancellor’s speech was how much, if any, of the additional funding might find its way into rescuing and then bolstering NHS dental services.
budget
being completely cynical the increase in the minimum wage costs the government nothing but secures 20% tax on income increase over the lower tax bracket level and more NI .Win / win for someone , just not any employer who might ditch the hiring for trainee posts
Annual Employment Allowance
According to the guidance: Quote : So, many dental practices may not be able to benefit from this particular allowance.You need to be logged in to leave comments.
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