Practice Plan area manager, Nicola Gresty, caught up with Wesleyan financial consultant Gareth Stainsby to talk about the recent budget announcements and how they could impact dentistry.
What was the biggest take away from the recent budget as far as dentists are concerned?
The biggest announcement certainly for NHS dentists was the lifting of the freeze on public sector pay. It was a really positive announcement, after such a hard time for NHS dentists.
What is important to remember though is that we don’t know yet what the increase in the public sector will be. We do know that the cost of living is going to increase. So we will need to wait and see whether these changes are in line with real term increases.
What I would say to dentists in general practice, is that they are not employed directly by the NHS. So they won’t benefit directly from the lifting of the pay freeze.
It will not apply to general practice. However, those working in that setting may see an increase in income depending on the upcoming changes to the NHS contracts.
Business rates will be re-evaluated every three years from 2023. What difference is this going to make to practices?
I think this is one where we will have to wait and see.
What I’m hearing from businesses and practices since the budget, is that the change is very much welcomed. However, I do think it’s fair to say overall it falls short for many. A lot of people were hoping for a root and branch change to business rates overall.
And in addition, it is important to remember that rates are part of devolved powers. So it is different for every UK nation.
Overall though, it is another good thing to come from the budget.
Can you tell us a bit about the extension to the loan recovery scheme and the VAT exemption extension on dental prostheses imports?
I’ve certainly talked to some of my dental practice owners that have taken advantage of the loan recovery scheme. It is worth reminding people of what it involves.
These are loans that practices can use for invoice or asset finance to support businesses hit by COVID.
You’re able to take out loans of £25,000 or more, and £1,000 pounds or more for invoice or asset finance.
Terms to repay borrowing are over three to six years. But the big benefit is the government guarantees 80% of the finance.
On the VAT exemption extension, we know that VAT takes up a decent amount in terms of costs, so this is great news.
We expect the cost of living to increase on a number of things. Therefore lifting of VAT will offset the rising cost of raw materials.
This has been well received. And it is nice that dentists have been given a direct giveaway in this budget.
Are there any other things that dentists can take away from this latest budget announcement?
There has been an extension of the annual investment allowance of £1 million. That was expected to end this year. This has been extended until March 2023. And there has been a cancellation in next year’s planned increase in the business rates multiplier, which will benefit all businesses.
Potentially rates were going to go up. So this news means more money in businesses pockets and that is a positive.
In addition to that, there are going to be no extra rates to pay if practices want to make any improvements to their premises. If you’ve got a practice and you’re looking to add another surgery, then this again is positive news.
Also, there is investment relief for any green technology you introduce to your premises. So, if you put solar panels on your roof, then you will get relief on the tax.
Another thing to remember is that the minimum wage has risen to £9.50 an hour. So there are some staff members who will benefit from that.
It is a positive thing from an individual perspective. However, from a practice perspective, businesses are going to see an increase in staff costings. So again, that is something you will need to factor in and absorb.
And finally, is there anything else that practices need to consider on the back of the budget?
The chancellor did a lot of things in the budget. But it was the things that he didn’t do that raised questions.
In respect of dentists, they have been concerned about potential changes to capital gains tax rates, which would have meant them having to pay extra tax if they sold their business. But nothing has changed.
In terms of retirement planning, there were no alterations to the lifetime allowance or annual allowance.
This impacts many dentists. And with the freezing of the lifetime allowance for this government, it is likely to lead to more having potential issues.
I would encourage clients to speak to a financial expert about this issue. They can help calculate it for you.
Finally, we often talk about tax relief on pensions as something that will alter.
At present you receive a tax relief at your highest marginal tax rate. This means higher earners benefit disproportionately to those on lower earnings.
The government hasn’t touched this, but it could do in the future.
I would suggest that everyone looks to take advantage of this. As well as the various other tax allowances that are out there, including the ISA allowance.
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