Chancellor of the Exchequer, Jeremy Hunt’s 2024 Spring Budget, was accompanied by a full fiscal statement from the Office for Budget Responsibility (OBR). In any election year, the Chancellor comes under pressure to make announcements that will boost their party in the opinion polls.
In the run up to the announcement, Jeremy Hunt was open about his desire to cut taxes, but also that the flatlining economy and his own fiscal rules didn’t leave him much room to manoeuvre.
So, did the policies announced in the Spring Budget amount to a Budget bonus for dentists?
Taxes
One of the most significant announcements was a 2% cut to National Insurance (NI) for employed people, which falls from 10% to 8% on earnings from £12,570 to £50,270.
The Chancellor said that would be worth £450 a year to the average employed person and £750 to higher rate taxpayers.
He also announced a 2% Income Tax cut for the self-employed, which includes many associate dentists, in a move he said was worth £350 to the average self-employed person.
The move comes after NI rates were cut by 2% for employed people and 1% for the self-employed barely three months ago.
However, contrary to the pre-election floating rumours, there was no action on Income Tax or Inheritance Tax
Iain Stevenson, Head of Dental at Wesleyan Financial Services, said “The cut to National Insurance will put more money back into the pockets of both salaried and self-employed dentists – something hugely valuable at a time when the cost of living is still high. Salaried dentists will see the rate they pay on earnings between £12,570 and £50,270 drop from 10% to 8%. Meanwhile, self-employed practitioners will see the amount they pay on profits between £12,570 and £50,270 drop from 9% to 6%.
“However, for a second time in a row, employer national insurance contributions remain unchanged. It means practices, which are still facing rising operating costs across the board, still haven’t had any support when it comes to increasing staffing costs. We would have liked to see some relief extended to them too.”
Savings & Investments
The Chancellor also announced an expansion of Individual Savings Accounts (ISAs), which are designed to encourage more people to save and invest without paying any tax on the profits.
A new ‘British ISA’ will provide an extra £5,000 tax-free allowance for UK investments – on top of the existing £20,000 allowance.
Quite how this will work in practice remains to be seen, but it comes after a relaxation of ISA rules in November which gave the flexibility to open accounts with multiple ISA providers and make limited transfers between ISAs.
Our research found that would encourage almost a third of UK adults to invest more money into ISAs.
Iain Stevenson, Head of Dental at Wesleyan Financial Services, said: “As usual, the devil will be in the detail of today’s Budget.
“However, anything that can help make ISAs an even more attractive option for saving and investing is to be welcomed.
“A ‘British ISA’ will effectively increase the ISA allowance by £5,000 and builds on the ISA reforms already planned for April at a time when so many other tax allowances remain frozen.
“We will eagerly await more information on how it will be administered.”
Business
In a move to boost business investment, the Chancellor extended the Full Expensing tax break that allows firms to deduct investments in equipment and premises from their profits, so they pay less Corporation Tax.
That will be extended to include leased assets “as soon as it’s affordable”.
At the same time, the VAT registration threshold was increased from £85,000 to £90,000.
Iain Stevenson, Head of Dental at Wesleyan Financial Services, said: “Expanding full expensing is a positive move for dental practices at a time when technology is constantly advancing and patients’ expectations are increasing.
“Leasing can be a less risky, more cost-effective way for practices to access the equipment that can enable them to expand the services they offer, including capitalising on the opportunities that private cosmetic work can bring.
“Increasing the VAT threshold will also be welcomed by practices who want to offer more cosmetic treatments, which has been such an important driver of growth in the industry.”
Property
For dentists with second homes, the Chancellor moved to scrap tax breaks which made it more profitable to let out properties to holiday makers rather than to long-term tenants.
He also abolished Stamp Duty relief for people buying more than one property, though he did reduce the higher rate of property Capital Gains Tax from 28% to 24%.
The lower rate will remain at 18% for any gains within the basic rate band and Private Residence Relief will continue to apply. Many dentists will and do invest in commercial buy to let, and holiday let properties – these will become less attractive.
Iain Stevenson, Head of Dental at Wesleyan Financial Services, said: “Dentists who are lucky enough to be able to invest in property will have to reconsider how they manage these investments, given the changes announced today.”
Other announcements included:
The investment in digitisation of the NHS at £3.5 billion cost, with expected savings of £35 billion and alcohol and fuel duty increases postponed for another 12 months.
Do you need further support?
The announcements from this year’s Spring Budget may leave you with unanswered questions about regarding your financial planning.
For further guidance and support, book a no-obligation financial review with a Specialist Dental Financial Adviser at Wesleyan Financial Services.
Tax treatment depends on individual circumstances and may be subject to change in future.
Bear in mind that the value of investments can go down as well as up and you may get back less than you invest.
Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority. Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Calls may be recorded to help us provide, monitor and improve our services to you.