…and early indications suggest there may be little in it to unsettle dentists – though we cannot be 100% sure, of course. According to Dentistry, the lead up to the announcement is unusually quiet.
Reports that capital gains tax could be brought in line with income tax now appear to have been ruled out, which is extremely reassuring to practice owners who might be planning to fund their retirement through a sale. The Chancellor has confirmed that employee national insurance, VAT, corporation tax, and the basic, higher, and additional rates of income tax will all remain unchanged. Furthermore, the Treasury has also rejected suggestions that the mansion tax threshold could drop from £2m to £1.5m which would have brought more homeowners, including some higher-earning dentists, into scope.
The more pressing concern for the profession is the continued freeze on tax thresholds. As earnings rise while thresholds stay put, more dentists are being drawn into higher income tax bands, and any form of relief from this is unlikely due to the current economic climate.
Several measures announced in previous budgets will also come into effect in 2027. From April, most unused pension funds and death benefits will be counted as part of an estate for inheritance tax purposes, and changes to ISA allowances are on the way. It is advised that dentists seek expert guidance on their tax position as early as possible, rather than making hasty decisions based on pre-budget rumours.
The £100,000 earnings threshold remains a significant issue as dentists approaching this level face an effective marginal income tax rate of 60%, or 67.5% in Scotland, alongside the loss of childcare support and child benefit.
Dentistry rightfully mentions that the threshold – which was introduced in April 2010 – was designed with the super-rich in mind rather than skilled clinicians, and that it has failed to keep pace with inflation. He describes a system that discourages experienced dentists from taking on extra work as “not fit for purpose”.
This year’s budget may prove relatively uneventful for the profession, but the changes already scheduled for 2027 make this a sensible moment for practice owners and associates to review their finances. Should the Chancellor choose to address the £100,000 tipping point, it could encourage more dentists to increase their hours, benefiting both the profession and the patients waiting for care.
Since you’re here, why not read about the push for oral care to be part of everyday healthcare
Main image credit: Unsplash
