Chancellor Jeremy Hunt has today announced the 2022 Autumn Budget with hopes of tackling the cost of living crisis. But what do his new economic plans mean for dentistry?
The 2022 Autumn Budget was announced today by Chancellor Jeremy Hunt.
With a focus on ‘stability, growth and public services’, the Chancellor outlined his economic plans to stabilise the UK and tackle the cost of living crisis.
Despite not mentioning dentistry specifically, the Chancellor addressed NHS pressures. ‘As a former health secretary, I know how hard people are working on the frontline and how much they are struggling after the pandemic.’
As a result, he announced an NHS budget increase of £3.3 billion for the next two years to ‘fulfil key priorities’.
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Savage cuts and gross negligence
Despite this budget increase, the BDA has called this Autumn Statement ‘gross negligence’. It believes the Budget fails to set aside funds to fully insulate the NHS from ‘skyrocketing inflation’. In addition, it leaves a half a billion pound hole in the dental budget.
As well as this, the BDA has estimated it would take an additional £1.5b a year to simply restore resources in NHS dentistry to 2010 levels.
BDA Chair Eddie Crouch said: ‘Failure to protect the NHS from soaring inflation amounts to savage cuts to frontline services.
‘This isn’t fiscal discipline, but gross negligence that will actively undermine patient care. If the Treasury expect practices to provide NHS care at a loss, it will only deepen the access crisis facing millions of patients.
‘The last round of austerity brought NHS dentistry to its knees. Another dose of “efficiency savings” will fatally undermine efforts to rebuild and reform this service.’
Key points from the announcement
Other key points from the Chancellor’s economic plan include:
- The threshold for the 45p tax rate will be reduced from £150,000 to £125,140
- The Chancellor will continue with former Prime Minister Liz Truss’s plan to spend £55bn to help households and businesses with energy bills
- Businesses can receive support worth £13.6bn over the next five years
- The household energy price cap will be extended for one year from April. However, instead of £2,500 a year, typical bills will be capped at £3,000
- The country’s inflation rate is predicted to reach 9.1% this year and 7.4% in 2023
- Unemployment is also expected to rise from 3.6% to 4.9% in 2024.
Carefully review your finances
Thomas Dickson, chartered financial planner from Wealthwide, has said the changes introduced in the Autumn Statement are going to affect all professionals working in dentistry.
‘As expected, all personal tax thresholds, personal allowances, income tax bands, and inheritance tax bands are frozen until 2028 which is effectively a stealth tax.
‘For higher earning dentists, the reduction in the threshold to start paying the top rate of income tax of 45% (or dividend rate of 39.35%) is reducing from £150,000 to £125,140. This could cost up to £1,243 in additional tax every year.
‘But it’s not just a tax on income. For those in the NHS pension who exceed their annual allowance, they will have to pay an even higher rate of tax if they earn between £125,140 and £150,000.
He continued: ‘The changes to capital gains tax (cutting the exemption from £12,300 to £6,000 next April and then £3,000 in 2024) will increase tax on gains by up to £1,764.
‘In addition, the dividend allowance cut (from £2,000 to £1,000 in 2023, then £500 in 2024) means it is even more important for people to carefully review their finances and structure their affairs to minimise the amount of tax they pay.’
‘We will have to wait and see’
Commenting on the NHS funding increase, Paul Graham, head of dental at Christie & Co, said: ‘It is great that the government is recognising the necessity of supporting the NHS which, as we know, is underfunded and categorically stretched, though it is not clear how this funding will impact dentistry. For this, we will have to wait and see.
‘The government is also set to publish a plan to improve the NHS and healthcare staffing crisis, focusing on doctors and nurses needed over the next 15 years. What exactly this will mean for dentistry, and under what time frame this plan will be published, was unclear but Hunt said he will ensure there is “better retention and productivity improvements”.
‘It was also announced that the national living wage will increase from £9.50 an hour for over-23s to £10.42 in April 2023. This will have a knock-on effect on the wages in the sector, increasing the already rising operating costs.’
Little to help the cost of living
Iain Stevenson, head of dental at Wesleyan Financial Services said: ‘Freezing the lower and middle income tax bands is a stealth tax that will hit many working in the sector. Many dentists expect their income to go up each year but freezing tax bands, coupled with high inflation, means people will have less in their pockets in real terms.
‘Higher earners are facing a higher tax bill as the threshold for the 45p tax rate is reduced. This is a move that won’t make much money for the Treasury’s coffers but means less disposable income for higher earners which will do nothing to help a move into recession.
‘The cost of living is already pushing household budgets close to the edge, and today’s news will do little to help those who are struggling.
‘We know that some are having to dip into their savings and pensions to cover living costs, but this should be done carefully and, if possible, with financial advice as it can have a significant impact on future retirement plans.’
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