Budget 2015 – good and bad news for dentists

How the budget will affect dentists

The Chancellor of the Exchequer, George Osborne, delivered the last budget of this parliament recently.

Tax cuts

Big tax cuts for income tax payers and help for savers through greater flexibility on ISAs.

With the majority of dentists being higher rate tax payers, this is positive news.

Simplification of the tax system was announced with the annual tax return removed – more details to follow.

The fuel duty increase will be frozen again.

The personal tax-free allowance will be raised to £11,000 in 2017.

The higher rate tax threshold, which affects most dentists, will rise to £43,300 in 2017/18.

Pensions hit

On a more negative front, the lifetime allowance on pensions is to be reduced to £1m from next year.

This is likely to significantly impact dentists with NHS pensions.

It remains to be seen what transitional protection will be offered to those breaching the new reduced allowance.

The change is potentially going to encourage dentists to draw their NHS pension earlier than planned to avoid a lifetime allowance charge.


Four major new steps on savings were announced:

  1. Greater access to pension annuities
  2. A more flexible ISA with annual savings limit increasing to £15,240 (2014/15) and allowing withdrawals and re-contributions in the same year without losing tax-free allowance
  3. ‘Help to buy’ ISA for first time buyers with a 25% top-up – effectively tax relief on ISAs
  4. First £1,000 of interest on savings income to be tax-free.


Corporation tax will be cut to 20% in two weeks time, with small business rates also to be cut.

Class 2 National Insurance is to be abolished.


Jon Drysdale, an independent financial adviser from PFM Dental, said: ‘While there are positives in this budget for dentists, the most worrying single announcement is the further cut to the lifetime pension allowance to £1m.

‘Many dentists are already subject to a charge as the allowance has fallen in recent years.

‘Hopefully, some transitional protection will be available and we will be following developments on this closely.

‘The need for specialist advice in this area has never been greater.’

PFM Dental offers independent financial advice exclusively to dentists. For more information visit www.pfmdental.co.uk.

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