New (financial) year, new plans!

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  Posted by: Dental Design      10th May 2021

Dental practice owners and professionals will likely be facing this new financial year with a lot more optimism than they did the last one.

In the March Budget, several changes to employment and business tax were announced which may or may not affect you as a dental professional, going forward. The new measures may also be something that could benefit you with regards to optimising your personal finances.

Here’s a quick round-up.

A few freezes, but is change on the cards?

The capital gains tax (CGT) annual exempt amount (AEA) is to remain frozen at its current rate, up to and including the 2025/26 tax year. For individuals, the AEA is £12,300, and any capital gains realised below this amount will not be subject to CGT.

The inheritance tax nil rate band (NRB) and the residence nil-rate band (RNRB) will also remain at their current level up to and including the 2025/26 tax year. Broader changes to the inheritance tax system may still be on the cards at some time in the future.

Corporation Tax set to rise… though not yet

What could affect your practice, if you trade as a limited company, is the Chancellor’s decision to increase the main Corporation Tax (CT) rate to 25% on profits over £250,000, deferred until 1 April 2023. For profits under £50,000, the rate will remain fixed at 19%. If a company’s profits fall between £50,000 and £250,000, the tax rate on the profits will be someone between 19% and 25%.

There’s more detail to learn, of course – and some might say that the deferred increase has the potential to make forecasting tax payments more layered and complex. Also, and although it may be two years away, now is the time to think about if and how the change could impact on your returns and future cashflow.

What else? 

From 6 April, new rules around off-payroll working, known as IR35, came into force for the private sector. These will ensure that workers who would have been an employee if they were providing services directly, pay the same amount in income tax and NICs, broadly speaking, as other employees. If these rules apply to you or your dental practice, or may do at some point in the future, you should already be prepared. If you aren’t, there is a wealth of information available online via the government’s website.

Also from 6 April, employers of veterans will get a 12-month exemption from NICs for the first year of civilian employment. Certain exemptions apply, so check with HMRC if you’re not sure.

Other things that are new and notable in business tax are for any company investing in qualifying, brand-new plant and machinery, they can claim a 130% capital allowance deduction. This deduction, which will knock 24.7p off your company tax bill for every £1 of expenditure, has been dubbed the “super-deduction”. This could apply to brand-new scanning equipment, or brand-new computers for the front-desk team, so could be worth exploring as a tax-saving strategy.

There will also be various changes relating to the purchase of business vehicles to encourage people to buy low or zero-emission vehicles, reflecting the government’s restated commitment to tackling climate change and “green” concerns, generally. Again, look online at the government’s website for greater detail about this, and all the other changes.

As we all start to move forward, practice owners and professionals should consider working with a specialist dental accountant, such as Figurit. With a team that combines a knowledge of the dental industry with the principles of good accountancy, we can help you plan ahead in confidence, and save you money too.

A new financial year and a new start? Let’s hope so, and let’s make it a profitable one too.

 

For more information, please visit https://figurit.com
or call Figurit (formerly known as Lansdell & Rose) on 020 7376 9333.

 

 

Author: Michael Lansdell – Business Director

Michael is a specialist Dental Accountant and Tax Advisor with strong technical and communication skills.

Completing his training with international accounting firm Deloitte he then became a founding Partner at

Figurit (formerly Lansdell&Rose).

Michael combines a strategic approach with high attention to detail and is focused on saving his clients tax

over both the short and long term, using robust tax-saving vehicles and tax efficient business structuring.

T: 020 7376 9333 E: info@figurit.com

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