Despite the ongoing challenges, there’s new hope for 2022
Featured Products Promotional FeaturesPosted by: Dental Design 19th March 2022
Most of us greeted January with a mix of relief, and cautious hope. Of course, we cannot ignore the energy crisis and how the rising cost of living will affect millions of people, your patients included – at time of writing, inflation in the UK had just reached a near 30-year high, at 5.4%. Like all businesses, dental practices can expect to feel the impact of the ongoing pressures on our economy.
What dental practice owners, principals and professionals can do, though, is to look back at the last year in tax. In doing so, it becomes easier to signpost what further changes could lie ahead. You do have the tools to steer yourself through choppy waters and, with support from experts, including a specialist dental accountant, you will be able to optimise your profits and run a business which has exploited all the opportunities for growth.
Increase in NIC rates
Announced last year was a 1.25% temporary hike in NICs, for the 2022-2023 tax year. In 2023, NICs rates will revert to 2021-2022 tax year levels, but the increase will be replaced by the Health and Social Care Levy, ringfenced to fund the NHS and other organisations/bodies in the sector.
Despite a manifesto promise of no tax increases, the pandemic led to record borrowing and public debt, so the government’s response was not unexpected. Nevertheless, if you’re an employer, you may be looking at the cost to your business. Billions will be raised, but could there be more tax increases to come? This takes us on to…
Increase in dividend tax rates
Another headline from 2021’s year in tax and if, you pay tax on your dividend income, this is likely to affect you. From April, the rate of Income Tax applicable to dividend income will increase by 1.25% for the ordinary, upper, and additional rate bands. Again, this is to support funding for health and social care. If you are a dental practice owner who pays themselves via dividends, you may want to get advice as to whether this will be the most tax efficient method, going forward.
Corporation Tax
Previous Budgets introduced the increase from 19% to 25%, to start from April 2023, with a reminder that the UK’s Corporation Tax (CT) rate is still one of the lowest within the G20. The increase was limited – for a business with taxable profits of up to £50,000, they stay on the existing rate. Those with profits between £50,000 and £250,000 will pay the main rate with a marginal relief. If you sell or dispose of a business asset, CT will be due on chargeable gains.
Income Tax, Capital Gains, Inheritance Tax
These rates all remained frozen, despite calls to simplify the CGT and IHT regimes. So, could there be future changes ahead? If these were put on the backburner during the turbulence of 2021, don’t be surprised.
A digital tax future
Making Tax Digital for Income Tax was delayed until 2024, but you still need to get your business prepared! HMRC wants to build a completely digital tax system, despite the pandemic slowing the progress of the rollout. Moreover, there are many benefits to “going digital” for all accounting processes, so why not look into them, if you haven’t done so already. For tax planning that will give you options, Figurit are chartered accountants with years of experience in working with the dental industry. We can help you with tax planning this year, and beyond.
Although we know that there challenging economic times ahead ahead, even the smallest ray of light is cause for hope. Focus on the future, while looking at the potential route ahead the past has shown us, taking its valuable lessons on board.
For more information, please visit https://figurit.com
or call Figurit (formerly known as Lansdell & Rose) on 020 7376 9333.
