As with many health professionals, dentists are facing the challenges of restricted funding within the NHS in relation to NHS dental services and are conscious of the need to be competitive on fees whilst continuing to be profitable. Whether you are a newly qualified dentist operating as a principal or associate, sound and practical financial advice that will help you build your future is paramount.
We have worked with health professionals as trusted advisers for many years and understand the challenges of running an efficient and profitable practice, for example:
Deciding on the best business structure is not always easy. Many traditional models focus on cost sharing agreements. More recently, the limited company model has been available to NHS dentists which had previously only been accessible to those working in the private sector. A limited company structure can reduce exposure to personal financial risk while sheltering profits from higher rates of personal tax to enable higher levels of investment back into the business. Often a company will present a better model for shared ownership or succession planning. A start-up business may benefit from running as an unincorporated business until it is established in order to take advantage of tax losses when initial set up costs may be high. At Duncan & Toplis, we can guide you through the various options to devise the best solution for you.
The NHS Pension Scheme
The introduction of the tapered annual allowance from 2015-16 could see many dentists who are part of the NHS pension scheme affected by the reduction in tax relief, representing a hike in tax bills particularly from the 2016-17 tax year onwards. It is important that NHS dentists seek financial advice from an Independent Financial Adviser that understands the NHS Pension scheme. We are able to offer this service through our membership of the Kreston International Healthcare Group.
Rising expenses and often shrinking incomes coupled with recent tax increases put pressure on the amount of income that can be drawn on a monthly basis. Salaries can often be the biggest cost, alongside general business overheads and the need to invest in modern equipment and technologies. It is important, therefore, to keep costs under review and budget ahead for the coming year. We work with a cost reduction consultant, Mark Brown of Business Savings Experts, who can carry out an expenditure audit on key running costs. It is very often the case that savings are identified by these audits, ultimately leading to increased profits.
Tax Relief and Capital Allowances
Opportunities to claim tax relief in the form of capital allowances are sometimes overlooked when acquiring or building a dental practice or adding an extension to an existing practice. Meticulous tax planning will ensure maximum revenues and profitability.
Personal tax planning
There are various tax allowances that should be considered each year to ensure you are minimising the amount of tax you pay. Both dividends and interest from savings and investments enjoy a zero percent rate up to certain limits. For 2017-18, £5,000 of dividend income can effectively be received tax free and up to £1,000 of interest for basic rate tax payers and £500 for higher rate tax payers. This will reduce the following year so effective planning is essential. In addition to this, the overall annual investment limit for tax free ISAs rises to £20,000 from 2017-18 and the annual capital gains tax allowance is £11,300. Make sure you are making maximum use of all these allowances as unused allowances can’t be carried forward to the next year.
Staffing and payroll
Staffing costs and administering the payment of staff are a large part of the practice costs. By outsourcing to our in-house payroll bureau, you can reduce overheads and have peace of mind that your business is up to date and compliant with all the latest legislative requirements. Our in-house HR team are also able to assist with any people management and employment law issues that may arise within your business. Our HR team’s approach is to work in partnership with you to minimise human resource costs and maximise employee satisfaction, retention and productivity.
From advice on business structures and tax planning to accountancy and payroll services, we offer the full spectrum of accountancy and business advisory services to the dental sector.
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