What the 2016 Budget Means for Dentists

On 16 March, the UK’s Chancellor of the Exchequer, George Osborne, delivered his first Budget of this calendar year and, with it, a raft of new policies and adjustments that could affect many UK-based dentists to whom we regularly deliver equipment. And, thankfully, the changes should largely affect them for the better. Here, we dissect many terms of the Budget and assess how they could help many of the UK’s dentists to better financial health.

Corporation tax lowered to 17% by 2020

Incorporated dental practices should appreciate that, as announced in the Budget, corporation tax will be lowered from the current 20% to 17% by the end of the decade. That goes a percentage point further than the cut announced in last year’s summer Budget, and should also increase the appeal of incorporation for practices yet to undergo it.

Increases in personal tax thresholds

Individual staff, too, could make personal savings thanks to these freshly-unveiled rises. For example, the personal tax threshold will reach £11,500 on 6 April, 2017 – that’s an increase of £500 after the changes that were implemented for the just-commenced tax year. Plus, next year will see the higher tax-rate threshold rise from the just-enacted £43,000 to £45,000. As Money4dentists’ MD, Richard T Lishman, observes, one result is that full-time dentists and practice owners on the higher tax-rate could save at least £400 yearly.

More generous rate reliefs for both small and large practices

The threshold for the small business rate relief is set to rise from £6,000 to a maximum of £15,000. This will be a permanent relief, not a one-off, and help up to 60,000 small businesses – many of which small dental practices. Meanwhile, for bigger practices, the higher rate relief will increase from £18,000 to £51,000. Nonetheless, you should get in touch with your financial adviser or local authority if you are unsure whether your own practice will be eligible for either of these expanded reliefs.

Reductions in capital gains tax for business assets

Also announced were cuts in capital gains tax. These reductions, which have already been enacted for the current tax year, apply not to an individual’s primary residential property, but instead business assets and other properties, such as estates that are owned to let. In these instances, the basic-rate tax has been slashed from 18% to 10%, while the higher rate tax has been lowered from 28% to 20%.

A new Lifetime ISA scheme

If you are a dental professional under 40, the government is set to help you to save for major expenses later in your life, such as buying a home or retirement. The government will so assist by introducing, in April 2017, a Lifetime ISA scheme. This will allow millions of adults aged under 40 to yearly save as much as £4,000 tax-free; the government will also throw in a 25% bonus on this cash. At the same time as the Lifetime ISA is introduced, the total amount that can be annually saved into an ISA will rise from £15,240 to £20,000.