Self-employment can offer a dentist many rewards. But equally, this change in employment status may be a big step for clinicians in terms of increased administrative workload and organising themselves financially. Selfemployed dentists have to adhere to tax legislation, but also the General Dental Council’s Standards and if a dentist works for the NHS, the terms of their NHS contracts.
From the outset, a newly selfemployed dentist should appoint a specialist dental accountant to ensure that their financial affairs and documentation is in order to optimise tax relief. Clinicians should also seek to familiarise themselves with some
of the main legislation that governs self-employment such as tax returns, business expenditure and keeping records to guarantee that they can work with as much freedom as possible.
For any dentist considering selfemployment, it is useful to understand how the tax payments system works. If newly self-employed, clinicians will need to register with HM Revenue and Customs as soon as they know their starting date. Dentists can do this by completing form CWF1 that will register them as selfemployed and will allow them to pay Class 2 National Insurance Contributions.
Newly self-employed dentists may experience a significant amount of time during which they are earning profits but not paying tax following a salaried position. For this reason, understanding tax for future tax planning will give self-employed
dentists peace of mind. The tax year runs from April 6 to the following April 5 and tax returns can be made up to April 5 each year and will be due the following January. Newly self-employed dentists will normally receive a letter from HM Revenue and Customs in April or May if they believe a tax return is needed and the first tax bill will be due on January 31 the following year.
Prior to completing a tax return, practitioners will need to collect all relevant information for HM Revenue and Customs. This should include records of business income and expenses; details of any purchases or sales of assets; details of any other income from other employment; and information about any income from savings and investments will need to be provided.
A good record system that details accurate and current information will maximise the financial benefits of selfemployment for dentists. HM Revenue and Customs state that records must be kept for another five years after the tax return deadline, so being organised is of paramount importance.
From the outset, records should keep track of the self-employed practitioner’s expenses, as tax is paid on profits HM Revenue and Customs will calculate profit based on income minus expenditure.
Claimable business expenditure is that which is exclusively used for a dentist’s work, this may include professional subscriptions, courses and conferences, cost of materials and indemnity insurance. Self-employed dentists may also claim motor expenses, but this does not include travel to and from the practitioner’s usual place of work, this covers the cost of travelling to courses, dental laboratories, call outs or visiting financial or legal advisers. By seeking the advice of a specialist dental accountant, a self-employed dentist will be in the best position to claim motor expenses effectively.
A specialist dental accountant will ensure that newly self-employed dentists are fully aware of the tax reliefs that are available for them to claim, they will also provide advanced tax planning advice. It is important to make sure that when seeking financial advice it comes from a specialist independent financial adviser who has a good understanding of the dental
industry and the unique financial challenges and characteristics that it presents.
Though the emphasis of dentistry is still firmly clinical, there is no denying that business aspects of the profession are becoming increasingly significant. This is why access to financial knowledge that is not only comprehensive, but also gained through experience is so important. Self-employment can bring a multitude of benefits for a dentist, especially in terms of more income and tax relief, but it also offers clinicians the greatest amount of autonomy to work in a dynamic industry. Appointing a specialist dental accountant will offer newly selfemployed dentists invaluable financial advice beyond the completion of tax returns. Professional and general financial advice will bring maximum benefits to self-employed dentists for an organised and lucrative career.