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Our aim is to maximise your income and legitimately minimise your tax. Below are some ideas we would be happy to discuss with you.
- Budget (April 2009)
Capital allowances – A dentist receives tax relief on capital expenditure (capital allowances). The first £50k of expenditure qualifies for 100% tax relief. The 2009 budget enhanced this by granting tax relief at 40% for expenditure in excess of £50k until April 2010. After this any excess expenditure will only receive tax relief at 20%. If you are a dentist who has recently renovated, or built, practice premises (or you are intending to do so) we can maximise your tax relief.
50% tax rate – From April 2010 the top income tax rate will rise to 50% for income over £150k (up from 45% previously announced and a year earlier than expected). Dental incorporation may be the answer - we can help.
No tax free allowance – From April 2010 the tax free allowance (currently £6,475) for those earning over £100k will be reduced by £1 for every £2 by which a dentist’s income exceeds £100k. Therefore dentists with income over £112,950 will have no tax free allowance from April 2010. Again dental incorporation may be the answer.
Pension contributions – From April 2011 higher rate tax relief will be tapered away for dentists with incomes between £150k and £180k so that for those with incomes above £180k pension contributions will only benefit from basic rate tax relief (i.e. 20%). From 22 April 2009 measures have been introduced to prevent individuals from taking advantage of higher rate tax relief on contributions made prior to the changes coming into effect
ISAs – The tax free limit has been increased to £10,200 (£5,100 in cash). This will take effect this year for those over 50 and next year for others.
- Goodwill (Feb 2009) – The goodwill of a dentist’s contract with a PCT is often their most valuable asset. However, under the GDS/PDS Regulations, when a sole contract holder dies the contract will generally terminate and the PCT will re-tender the contract. As a result the goodwill value will evaporate. The goodwill can be protected under a partnership arrangement or by incorporating.
- Dental incorporation (Jan 2009) – As a PDS/GDS contract will usually terminate on incorporation the PCT should be consulted prior to the change. PCTs may try to insert clauses into the contract, requiring a company to obtain PCT consent on changes to directors and shareholders. This would have a material impact on any sale of a business.
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