Richard Lishman reflects on what it means for dental professionals.
Jeremy Hunt, chancellor of the exchequer, unveiled his Autumn Statement in November with grand changes to the minimum wage, business taxes, and National Insurance. He hailed the changes made as the “biggest ever boost for business investment in modern times”.
His statement came at a time when the UK’s tax burden was at its highest since the Second World War, and with cost-of-living pressures still ever-present for millions. The changes weren’t expected to be ground-breaking, but they feature a number of key differences for clinicians and practices across the United Kingdom.
Personal profits
Taking many headlines following the statement, National Insurance was the hot topic in the lead-up to the big event. The main rate was expected to be dropped from 12 per cent to 11 per cent on personal income made between £12,571 and £50,271. Instead, it was reduced further to 10 per cent, saving an individual on a £50,000 salary around £747.84 a year as of January 2024.
For associate dentists who are self-employed, there are further changes to National Insurance measures that make a significant difference. Firstly, weekly Class 2 National Insurance contributions will be effectively abolished from April 2024. It was formerly a compulsory flat rate charge of £3.45 per week required from people with a self-employed income that exceeded £12,570 per annum. It would add up quickly, and cost individuals nearly £180 a year.
Similarly, Class 4 National Insurance contributions, also required from self-employed individuals making more than £12,570 a year, have seen a drop. It is not quite as dramatic as the complete abolition of Class 2 payments, nor the two per cent drop from the main rate, but its 1p reduction from nine per cent to eight per cent will be enough to save those earning £50,000 an extra £374.30 a year.
Overall, a self-employed dental professional earning a £50,000 salary over the year would see more than an additional £550 in their pocket compared to the last financial year. Jeremy proudly said that this would affect more than two million people across the United Kingdom.
Big breaks for business
It could be argued that Jeremy’s centrepiece to the statement was a clean cut to business taxes. In an attempt to encourage growth and investment in business development, the Spring Budget saw the introduction of full expensing from April 1, 2023, to March 31, 2026. Seven months on, it has been made permanent.
Costing £11bn a year, the measure was only going to be made so when it was deemed affordable. By taking such drastic action, Jeremy introduced what he called the “largest business tax cut in British history” – but what does it mean?
In a bid to provide certainty and encourage long-term decision making, the measure meant all businesses (including most partnerships) could claim 100 per cent capital allowances on any qualifying plant and machinery investments. Effectively, the cost of an investment could be written off in one go. For every pound invested, taxes were cut by up to 25p.
Dental practices may see this as a sign to invest where appropriate in new digital equipment, transforming the care that can be provided whilst maintaining greater foresight over expenditure in the near future. It may be easier to plan the growth of your practice this way, and tactically choose where expenditures can be allocated to provide the highest level of care to your patients.
Why was this such a significant change? It can provide an improved level of stability over the tax cuts a business is facing. The UK will have the lowest headline corporation tax rate in the G7, a source of obvious pride for the Chancellor and his party.
106 measures to go
Elsewhere, Jeremy also introduced measures to increase the National Living Wage. A rise to £11.44 from £10.42 was seen for those over 23, but the new changes also extend this bracket to include 21- and 22-year-olds. In just three years, the hourly rate for a 21-year-old on the minimum payment would have risen 39.5 per cent.
Further investments were made into high-growth industries of the future, namely those turning the wheels for clean energy, which will undoubtedly trickle down to make dentistry greener as an industry in the future.
The Autumn Statement introduced an immense 110 measures, some more headline-grabbing than others. It can be hard to filter through what affects you as a dentist, practice owner, or individual. Consider seeking expert advice from the team at money4dentists, the specialist independent financial advisers that have been working exclusively with dental professionals for more than two decades. They can help you break down what the changes mean for your practice and the care you can provide to your patients, as well as advice on a myriad of other financial aspects.
For the self-employed dental professional or business owner, this Autumn Statement can bring some optimism for growth in the coming months and years. It may present an opportunity to transform your care forever.
For more information email info@money4dentists.com or visit www.money4dentists.com