The UK government is set to announce the Autumn Budget for 2026 on 28 October – Iain Stevenson considers what dentists should expect and what they should brace themselves for.
The rumour mill has been uncharacteristically quiet in the run-up to this year’s budget. Early signals that capital gains tax could be equalised with income tax now appear to have been quashed, which is good news for dentists planning to sell their practice to help fund their retirement plans.
Speculation that the mansion tax threshold could be cut from £2m to £1.5m has also been dismissed by the Treasury.
The Chancellor has also confirmed that rates of employee national insurance, VAT and corporation tax will remain untouched, as will the basic, higher and additional rates of income tax.
So, what’s left for dentists?
More significant is that the freeze on thresholds as earnings continue to increase means more dentists are inevitably pushed into higher income tax bands.
However, the current economic backdrop means that moves to mitigate this ‘stealth tightening’ should be considered unlikely.
As things stand, this year’s budget may well be something of a non-event for dentists, though there are a number of policy announcements from previous budgets that come into effect in 2027.
Perhaps most pertinent for dentists is the decision that most unused pension funds and death benefits will be included in the estate for inheritance tax purposes from April. ISA allowances are changing too.
These reforms should prompt dentists to seek expert advice to help manage their tax exposure as soon as possible and not be tempted to make any knee-jerk decisions based on pre-budget speculation.
Will the Autumn Budget address the £100,000 tax cliff edge?
The Chancellor should use this budget to address the tax cliff edges that are discouraging dentists from taking on additional work, at a time when so many people are struggling to access NHS dentistry.
For dentists, the current tax system is creating significant financial disincentives for them to working additional hours when they approach the £100,000 earnings threshold. Many tell us they are even choosing to reduce their sessions because the financial consequences can be so significant.
It’s an issue that disproportionally affects women returning to work after having children, who lose childcare support and child benefit as their earnings rise.
These are not the super-rich that this policy was designed to target when this threshold took effect from April 2010, these are skilled, hardworking dentists who are increasingly being caught by an outdated tax regime that has failed to keep pace with inflation.
For a dentist who is close to the threshold, losing access to valuable childcare support while facing an effective marginal income tax rate of 60%, or 67.5% in Scotland, will mean taking on additional work may not be worthwhile.
At a time when NHS dentistry is under such pressure, a tax system that discourages experienced dentists from taking on more work is not fit for purpose.
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