Get your NHS pension right

The Annual Reconciliation Report (ARR) is the practice owner’s opportunity to confirm the pensionable pay allocation for the practice and is vitally important to ensure they and their associates maintain accurate NHS pension scheme records.

The ARR is calculated as:

  1. The pensionable pay ‘ceiling’ for the practice is the gross amount of the NHS contract multiplied by 43.9%
  2. For associates their pensionable pay figure is what they actually get paid rather than any calculation involving the UDA (units of dental activity) value
  3. For practice owners the pensionable pay figure is the total ‘ceiling’ amount less the following:
  • Total of all associates' pensionable pay
  • Actual pay for any dentists working at the practice who are already in receipt of their NHS pension
  • Actual pay for any associates who operate through a limited company.

The remaining amount may be claimed by the practice owner as their own pensionable pay.

However, the dental services team at the NHS Business Services Authority is quite clear that practice owners don’t have to claim all of the remaining amount as their own pensionable pay.

Why wouldn’t practice owners claim the maximum pensionable pay?

Well, an increase in pensionable pay could mean practice owners breach the new HMRC lifetime and annual limits for pensions.

Furthermore, practice owners must have sufficient earned income (net profits/salary/dividends) to justify the level of pension contributions that they can claim tax relief on.

There is still general confusion over this among dentists, their advisers and accountants.

Consequently, make sure you seek advice from a specialist if you are unsure about your options.

PFM Townends is team of specialist dental accountants. For further information please visit

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