The Budget

21 March 2016
Volume 31 · Issue 6

Jon Drysdale of chartered financial planners, PFM Dental, assesses last week’s Budget. Headlines may focus on the fragility of the economy and the need to further cut public spending but the Chancellor offered positive news on personal finances which could benefit dentists.

  • Higher rate tax threshold to rise from £42,385 to £45,000 in April, 2017. The majority of dentists are higher rate tax payers and will therefore feel the benefit. 
  • Many dentists employ their spouse and will take advantage of the tax free personal allowance rising to £11,500 also in April, 2017. 
  • Annual Isa limit to rise from £15,000 to £20,000. This is a welcome increase to the alternative savings vehicle for those dentists no longer funding personal pensions (due to lifetime and annual allowance limits). 
  • Dentists trading as a limited company will welcome the changes to corporation tax, cut from 20 per cent to 17 per cent by April, 2020. This may somewhat offset previously announced increases to dividend tax effective from April. 
  • Reforms to business rates will mean 6,000 small businesses pay no rates and 250,000 have their rates cuts from April, 2017. 
  • Dentists buying a practice with a freehold property are likely to be affected by changes to commercial stamp duty – 0 per cent rate on purchases up to £150,000, 2 per cent on the next £100,000 and a 5 per cent top rate on purchases above £250,000. The freehold of a dental practice is often valued at less than £250,000 so this could be an advantage to many buyers. However, buying a larger freehold practice, especially one in the south east, could make you worse off.

 

The much anticipated changes to personal pensions and tax relief didn't transpire - but we already expected that didn't we?

A more detailed appraisal of the 2016 budget will shortly be available at pfmdental.co.uk