Running a Dental Practice in an Inflationary Environment

Is the current model of running a dental practice flawed in an inflationary environment?

Running a dental practice is a costly business. 

High capital costs, high staffing costs, high premises costs, high marketing costs….the list goes on, so how can you build a profitable dental practice or group?

Firstly, if there is scope to reduce some element of cost in a dental practice, it’s so important to try and do this.

However, if this is executed poorly it impacts delivery and service standards, which ultimately has a detrimental impact on the business.

But high costs means high private prices just to make a decent return, hence why we see the huge queues of people lining up for an NHS dentist in certain parts of the country.

Despite this, more and more UK dentists are opening private practices from Land’s End to John O’Groats.

Some will succeed and some will fly, but I am sure others will falter too.

This begs the question, is the current financial model for operating a dental practice fundamentally flawed?

Last week I had an interesting conversation with a rather fine dentist in Europe. Despite the impression that everyone in his country can afford anything, he made a really valid point – that not everyone can afford to pay for private care. In fact, around 1/3 of the population cannot afford to pay for private care (the market is mainly private in this country).

This means they adapted their business model for delivering dentistry using technology, dental hygienists and only utilising the dentist’s time for key dental aspects. 

They have built a dental network that is specialised and capital investment is focused on prevention/maintenance and conservative treatment to cover the most significant part of the demand of their target segment (price sensitive patients, who appreciate regular prophylaxis and checkups).

At all their branches, X-rays and intra-oral scans are carried out by hygienists in local primary prevention and screening centres. This information is then relayed back to a central diagnosis hub, where the information is reviewed by a dental team.

All diagnosis is legally required to be done by a dentist only. All x-rays and intra-oral scans are taken under the recommendation of a dentist.

Now after the diagnosis, the diagnosis hub is able to deliver high-quality, personalised teleconsultations, from hygiene coaching to immediate triage and management of dental emergencies (immediate instructions and medical prescriptions are provided as needed and appointments for the specific issue are scheduled in the first available spot), thus improving accessibility, timeliness and appropriateness of treatment in a very much cost-effective way.

So if a dentist is required in a certain location, they can move the dentists between sites, ensuring that there is minimised idle capacity, which allows them to keep their prices lower as they have optimised their whole workflow.

A very interesting business model, and one that could work as the costs get higher, and patients’ ability to pay higher prices reduces.

One to watch, and adapt to other markets including the UK.

Should you buy a BUPA dental practice?

Bupa revealed today they are either divesting or merging approximately 85 dental practices across the UK. That’s almost 20% of their practices.

It was only around 10 years back they were acquiring (including our Neem Tree Canary Wharf practice was one of their earlier purchases in 2013), and now with the challenges many of the groups are facing they are planning to off load a whole bunch of dental practices across the UK.

Having looked at the list, I know some of the practices they are selling, as I brokered the sale to them from the original seller!!!

Now the world is changing, and BUPA is citing resourcing and the challenges in NHS dentistry as the reason for the significant changes.

Now the question must be asked, should you consider buying a BUPA practice if it comes on the market?

As I understand further details will be released in the next few days.

Three questions to ask yourself before you consider a purchase:

  1. If Bupa could not do it, could you? A corporate is a difficult beast to navigate, with many slow-moving parts, if you have the hunger and entrepreneurial drive, you could pick up a practice for a song.
  2. What about staffing the practice? Well BUPA have cited that they were struggling to find suitable dentists and team members to provide a certain level of care. I believe if an owner gets involved and gets their hands dirty, 8 times out of 10 the practice will develop and grow. But it’s essential that the practice is purchased at the right price.
  3. Can you get the funding for the practice purchase? The easy answer is, it depends. There are numerous factors at play including what is being sold and for what price, and it’s so important not to get dragged into a competition for buying a practice, work out the numbers and then make a suitable offer.

Getting the right practice at the right price will be the most important thing if you are considering a purchase, and as we all know they are keen to offload, so you are already in a stronger position of negotiation.

If you need help with assessing, financing and carrying out the due diligence of one of the planned BUPA sales, get in touch with our experienced independent team as we have the expertise to assist.

Our finance team are extremely experienced and ready to help you make the right purchase at the right price.

Make sure you seek independent professional advice in making any such purchase.

A list of BUPA dental practices under change can be found here.

Building a Healthcare Business: Further Information

To find out more about building a successful healthcare business, check out our Learning Centre, full of articles and webinars covering how to buy, start, grow and sell a medical health company, or book a free, no-obligation consultation with one of the team. 

For all our previous articles, webinars and video updates, subscribe to our YouTube channel and follow us on YouTube, Facebook, LinkedIn and Instagram.

Back to Work Budget Update

Well, Jeremy Hunt has announced the UK Budget for 2023 and here are the main takeaways you need to be aware of:

  • The main rate of corporation tax, paid by businesses on taxable profits over £250,000, confirmed to increase from 19% to 25%
  • Companies able to deduct investment in new machinery and technology to lower their taxable profits
  • Tax breaks and other benefits for 12 new Investment Zones across the UK, funded by £80m each over the next five years
  • The cap on the amount workers can accumulate in pensions savings over their lifetime before having to pay extra tax – currently £1.07m – will be abolished
  • The tax-free yearly allowance for pension pots is to rise from £40,000 to £60,000 – having been frozen for nine years
  • Government subsidies limiting typical household energy bills to £2,500 a year will be extended for three months, until the end of June
  • Energy charges for prepayment meters will be brought into line with prices for customers paying by direct debit
  • Office for Budget Responsibility predicts the UK will avoid recession in 2023, but the economy will shrink by 0.2%
  • Growth of 1.8% predicted for next year, with 2.5% in 2025 and 2.1% in 2026
  • UK’s inflation rate predicted to fall to 2.9% by the end of this year, down from 10.7% in the last three months of 2022
  • Underlying debt forecast to be 92.4% of GDP this year, rising to 93.7% in 2024

One of the more noteworthy points is the changes to capital allowances for SMEs. These changes will take over from the current 130% super deduction:

  • From April 2023 until the end of March 2026, companies can claim 100% capital allowances on qualifying plant and machinery investments.
  • Full expensing allows companies to write off the cost of investment in one go.
  • Under full expensing, for every pound a company invests, their taxes are cut by up to 25p.

This budget is being referred to as the Back to Work Budget, and it’s easy to see why. The intention appears to be to encourage the UK to work more, work longer and to invest in their businesses. We’ll see how it plays out! 

Rising energy costs: What we can save you.

With energy costs rising at record levels and looming PSTN & ISDN switch-off, it’s more important than ever for dental practices to save as much money as possible on their utility bills. 

There is no price cap on commercial energy supplies, which means businesses like yours will see an even bigger increase than domestic households for gas and electric. In fact, the domestic market is going up 54% from April 1st 2022, and some commercial suppliers are charging nearly £1 per kWh.

Our partners save businesses an average of 34% on their utility bills. Even if you already have energy supply contracts, we can help make sure you’re getting the best deal on the market. 

Another price increase facing businesses is BT’s 9.3% increase from 1st April. Even for non-BT customers, other providers will typical follow suit and increase their prices alongside BT.

These changes will impact many businesses and it’s important to make sure your telecommunications are future proofed. Again, our partners can help make sure you’re getting the best terms on the market. 

You do not have to change supplier or be out of contract to save money.

To find out more about how we can help your dental practice save money on an increasing utility bill, book a free call with us!  

What does your dental practice look like?

Most people don’t actually realise this, but you don’t have to go old-school or traditional with how your dental practice looks. Most dental practice owners, especially new ones, need to realise that traditional doesn’t necessarily mean successful anymore.

What do you want your dental practice to look like? What do you want your dental practice to feel like?

Most people stick with the plain, white, ‘surgical’ look that they have seen in dental offices their whole lives. Some prefer for their dental offices to look as professional as can be which to some people means, plain white walls and simple decor.

However, when the cost is marginally different, you can go with a whole different look. You can go differently with the type of design you pick depending on what you are trying to do. Are you trying to make more money? Are you stressed out because the current design is inefficient? Are you growing and booked out so far that you can’t see patients fast enough?

Sure, many dental offices look the same. That means you look exactly like them, it means you’re just another normal old dental practice ‘just like the rest’ in competition with one another. What worked 20 years ago, does not necessarily work today.

If you are trying to make your patients choose you instead of the dentist down the road, if you are trying to stand out in an industry that is already quite crowded, let your work speak for itself and design your practice differently!

What used to work is now seen as ‘mainstream’, sticking with what works isn’t a bad thing, but trying to switch things up may work a lot more in your favour in the long run. 

If you’re looking for a sign to redesign your practice without crisp white walls with the hospital blue accents, this is your sign!

Since your business is in the healthcare sector, you need to ensure that your dental office designers are all conscious of patient well-being throughout the entire design process.

Most people do not enjoy visiting the dentist, in fact it is often the most daunting idea for many people. So how do you slip out of this awful cliche? Maybe try something new with the design.

The planning and design of your practice must reflect intense attention to the little details that will help create a sense of comfort, trust and even style to your practice as well as offering patient privacy.

Lighting and ceiling design as well as colour selection and material finishes amongst many other design factors are all, in their own right, keys to achieving an inviting and appealing environment. 

Being different is good, but a good designer will be able to marry the idea of keeping the dental office classy and clean with hints of your ideas. Since dentistry has become increasingly competitive, dental professionals should ideally make their practices distinctly different from their competitors down the road. 

The main differences will lie in the services offered and the quality of them and how they are delivered; however, your dental practice needs to attract the clients to begin with. 

Starting a Dental Practice: Get Started

We’ve been helping the UK’s dentists start their own practices for nearly 20 years and we know exactly what it takes to make your practice a success!

Our Dental Practice Start-up Programme is a hands-on consultancy service designed to take you through your whole journey to becoming a dental practice owner. Book a free, no-obligation consultation with one of our team at a time that suits you (including evenings). We’ll call you back and have a chat about how we can help start your dream practice.

Contact us today for all the advice, support and expertise you’ll ever need to start a dental practice.

Learn More: Starting a Dental Practice

For more information please check out the articles and webinars in the start a dental practice section of our Learning Centre, like our guide on How to Start a Dental Practice in 13 Steps.

For all our previous articles, webinars and video updates, subscribe to our YouTube channel and follow us on Facebook, LinkedIn and Instagram.

5 Tax Tips for Dentists and Doctors in May 2021

As we are moving further into the 2021-22 tax year we are starting to see the light at the end of the pandemic tunnel, which means now is the best time for you to review and refresh your financial affairs. Now is the time for business owners like yourself to maximise the tax benefits available to you for further capital investment and innovation, and right here is the perfect place for you to start. Here are Samera’s Tax Top Tips for Dentists and Doctors. Our tips offer valuable insight and inspiration for you and your business to grow. 

1. Stamp Duty Holiday 

The stamp duty holiday extension has been confirmed and will apply to all residential property buyers. This means that you will not have to pay stamp duty on the first £500,000 of your property if you complete the transfer legally before 30 June 2021. From 1 July 2021 to 30 September 2021 the nil band will be £250,000. The nil rate band will then return on 1 October 2021 to the standard amount of £125,000.

If you are in the midst of transferring or acquiring a residential property, or even considering it, due to this stamp duty holiday you may want to accelerate matters before the stamp duty returns and your potential savings wither away. Accelerating your purchases or transfers will enable you to achieve the most stamp duty savings. Get in touch with our advisors for further information.

2. Super deduction and the SR Allowance

The super deductions and special rate first year allowance (SR allowance) temporarily increases reliefs for companies within any sector on qualifying expenditure on plant or machinery from 1 April 2021 to 31 March 2023. The super deduction introduced in 2021 was the biggest business tax cut in modern British history. This recent capital allowance and the SR allowance gives companies up to 130% tax relief on the qualifying cost of the capital investment.  These allowances are only available for companies, not for any self-employed businesses or partnerships.

Both these enhanced capital allowances are in addition to the existing ongoing Annual Investment Allowance which already gives relief for costs of qualifying plant and machinery up to £1M in the tax year of purchase. 

It is important to note that certain assets do not qualify for relief such as cars or second-hand equipment but the majority of brand-new plant machinery and equipment for use in your trade is likely to qualify. These are reliefs where the date of expenditure is important for the assets to qualify so businesses will need to maintain records of dates of acquisition especially for larger projects that span between the allotted dates (1 April 2021-1 April 2023).

Click here to find out more about the superdeduction.

3. Capital Taxes Planning

Although many rumours have been floating around leading up to the March Budget, no changes have been made. However, it is the view amongst many of our tax professionals that the increase of tax with Capital Gains Tax (CGT) is hanging in the balance and is only a matter of time before it will be increased. 

If you are currently considering whether to transfer or sell any assets, it may be a good idea for you to get ahead and start to accelerate such sales and transfers in light of potential CGT changes that are imminently forthcoming.

4. Use of a Family Trust

This tip is particularly useful if you are looking to undertake asset protection or Inheritance Tax Planning (IHT) – otherwise, at the event of your death, HMRC could be entitled to IHT at the rate of 40% of your assets. Inheritance tax alone raised a record of £4.9bn in the last financial year.

You can control a family trust by yourself and it can hold assets for any of your family members including your children with distributions purely made at your discretion. Doing this can remove the value out of your IHT estate therefore, reducing your estate to a more manageable value. Your estate includes everything you own and the trust can help you keep a lump sum outside of your survivor’s estate to ensure it is not subject to IHT. The use of a trust could also protect your family legacy in various ways. 

Certain assets are able to qualify for 100% relief from IHT upon transfer into trust. If you have a very large and complicated estate, the sooner you start planning, the better. An efficient IHT plan involves gifting assets during your lifetime instead of one large trust at the end. Each person can generally transfer upto £325,000 into trust without incurring any tax charges upon entry. 

5. Research and Development 

The Research and Development tax credit scheme is one that countless companies are still not making use of. This scheme is the main source of government support in the UK for innovative companies. If you can demonstrate that your expenditures went towards research and development costs (by definition by HMRC of what expenditure you can claim), then you will be able to claim on it. Many eligible businesses can claim benefit from additional tax relief of up to £24.70 for every £100 of qualifying expenditure. There is now no minimum expenditure on qualifying for R&D required to make a claim for tax credit. 

If you have used any sort of science or technology or used a particular service for a project or a problem in your business that needed specialist help to fix, you may have a potential claim. If you are unsure whether your project might qualify for this valuable relief, get in touch with one of our professional advisors. 

Click here to read our article on Dentist and Dental Associate Expenses Guide

Book a Consultation

To find out more about your tax options and what Samera can do to help you, book a virtual consultation with one of the Samera Finance team.

Dental Accounts & Tax Specialists

As dental practice owners ourselves, we know what makes a clinic tick. We have been working with dentists for over 20 years to help manage their accounts and tax.

Whether you’re a dental associate, run your own practice or own a dental group and are looking to save time, money and effort on your accounts and tax then we want to hear from you. Our digital platform takes the hassle and the paperwork out of accounts.

To find out more about how you can save time, money and effort on your accounts and tax when you automate your finances with Samera, book a free consultation with one of our accounting team today.

Dental Accounts & Tax: Further Information

For more articles, webinars and blogs on dental accounts check out the dental accountancy section of our Learning Centre and follow us on YouTube, Facebook, LinkedIn and Instagram.

Can You Swap Shares Without Any Tax Charges?

Share for share exchanges are very common and are used for various commercial reorganisations. These exchanges often occur when forming new holding companies in order to transfer assets out of the original company.

In order to ensure the transaction is tax neutral and does not succumb to any capital gains tax, stamp duty or income tax, these exchanges need serious consideration and thought, you will often need experienced professionals like Samera to help you through the process. 

Share For Share Exchange 

A share for share exchange is when a company transfers shares to someone in exchange for shares in another company. These exchanges often occur when forming new holding companies in order to transfer assets out of the original company. New shareholders can be introduced or the shareholders can be the same in the new and old companies.

How Our Qualified Experts Can Help You

  • We specialise in helping private companies, private practices, directors and shareholders. 
  • Not only can we advise you what to do but we have also seen many before you make countless mistakes that you can avoid.
  • We handle new company holdings and de-merges.
  • We also deal with shareholder resolutions and we can draft the agreements necessary to obtain the HMRC tax clearances, working alongside specialist solicitors

What You Need for a Share for Share Exchange 

There are a few things that are mandatory for a successful exchange, including an exact time frame, a qualified tax advisor as well as the following:

Shareholder Approval 

It is mandatory for you to get the approval for the transaction from your shareholder for this exchange to proceed. This does not have to be done by you completely, the team here at Samera will be able manage any compliance issues including board approval and shareholder resolutions. 

Shareholder Considerations

Although the shareholders do not receive any cash, HMRC will look to subject the share transfer to tax. Regardless of this, there are a number of legitimate tax legislation reliefs which legally enable shareholders to minimise any liability to tax or defer any tax until a physical sale of the shares occurs. 

Documentation

There is a lot of documentation that is accompanied with these types of exchanges that can put people off but thankfully we can sort a lot of that out for you, leaving you to focus on the things that really matter.

We handle a variety of aspects of the exchange including:

  • The revised articles or shareholders’ agreement.
  • The clearance application required from HMRC.
  • Shareholder resolutions.
  • Stamping documentation.
  • Dealing with HMRC, including reporting and payment of any taxes 
  • The consultation with any employees affected as a result of the reorganisation. 

Execution of Share for Share Exchanges 

The uses of share for share exchanges are extensive enough to cover various situations. If this is the path you decided is best for you and your business, we have compiled a set of necessary background considerations. 

Share for Share Commercial Exchanges 

In our extensive experience here are the most common scenarios of share for share exchanges we have come across:

  • Creating distributable reserves.
  • Restructuring and streamlining ownerships.
  • Managing the planning of succession.
  • Mediating and settling shareholder disputes.
  • Ring fencing liabilities.
    (This scenario is particularly popular within the tech industry)

Approaching Share for Share Exchanges 

If this service looks like something that would interest you, your shareholders or will benefit your business, get in touch with our in house experts here at Samera. The team will happily guide you and offer you expert advice and tips that aid this process. This does not have to be stressful and expensive, the structure of share for share exchanges can be very flexible. The approach and structure for your exchange will be heavily dependent on the circumstances. 

Scheme of Arrangement

A scheme of arrangement involves the process of a court cancelling an existing company’s entire issued ordinary share capital. Due to the court process, schemes of arrangement are not very common. 

Share for Share Exchange FAQ’s

These questions are very common and need answering before implementing the share for share exchange. 

Is Business Assets Disposal Relief Preserved?

During a share for share exchange, you may lose Business Assets Disposal Relief / entrepreneurs’ relief if there is a future disposal of the holding company’s shares. However, we have compiled a few ways that you can preserve your entrepreneurs’ relief.

Your can preserve your Business Assets Disposal Relief if:

– The company is a holding company of a trading company.

– The shares before the exchange have been held for at least 12 months and represent 5% of the new holding company’s issued share capital.

What is the Position for Option Holders?

Share plan documentation and plan rules are absolutely vital when addressing what happens to share rights of option holders. Without this being concrete before the exchange, the scheme of arrangement or share for share exchange may unintentionally trigger the early vesting or exercise of rights.

You need to review employee share option plans before beginning to implement the share for share exchange to eradicate any implications that may arise.

Is Stamp Duty Payable?

Stamp duty exemption on a qualifying share for share exchange only applies in certain cases, otherwise stamp duty is payable by the new holding company at a 0.5% rate. 

Usually HMRC offer a stamp duty relief for the new holding company when: 

  • The new holding company acquired all, not just some, of the existing company’s issued share capital.
  • The consideration to the existing shareholders is the granting of shares in the new holding company.
  • The shareholders of the existing company acquire the same percentage and class of shares in the new holding company following completion of the exchange.
  • The share for share exchange is for commercial reasons and not for tax avoidance.

Should the shareholders complete a hold over elections?

Depending on your personal circumstance, we may recommend the use of hold over elections.

A hold over election defers a charge to capital gains tax which may arise as part of the share for share exchange until the shares are completely disposed of and proceeds are received. 

Hold over elections also need to be reported to HMRC in order to be as effective and binding as possible.

Impact for SEIS and EIS investors under the share for share exchange

In most share for share exchanges, EIS shareholders lose their tax reliefs on disposal within three years of their acquisition. When shareholders swap shares, the shares end up holding in a completely different company, which is why share for share is considered as a disposal. However, HMRC will not consider the shares ‘disposed’ after they are transferred, which may preserve income tax reliefs in certain situations.

These situations include:

You obtain HMRC clearance in advance.

The new holding company acquires all, not just some, of the existing company’s issued share capital under the scheme of arrangement or on a share for share exchange.
The only issued shares in the new holding company are owned by the subscribers.

Can a clearance as to tax neutrality be obtained from HMRC?

You can apply to HMRC for a tax clearance as there are no capital gains tax arising when shareholders swap shares in one company to another company. The clearance will also be able to confirm that there is no income tax liability that your company will have to pay. 

Contact us for more information 

If you are looking for someone to help your share for share exchange proceed as smoothly as possible, then please get in touch with our experts here at Samera Business advisors. Our team will happily guide you through the process, take care of the due diligence and HMRC communication and can make the process of your share exchange as seamless as possible. 

Further Information on Accounts & Tax

Our team of specialist accountants and tax experts can help manage, process and structure your business’s finances. From management accounts and payroll & pensions to tax planning and cash flow management, we can take care of the full back-office function of your business.

Book a free, no-obligation consultation with one of the team to find out how we can make your accounts & tax easier, quicker and cheaper.

For all our previous articles, webinars and video updates, subscribe to our YouTube channel and follow us on Facebook and Instagram.

What Does the Super-Deduction Mean for Dentists?

From 1 April 2021 until 31 March 2023, any businesses investing in qualifying new plant and machinery assets will be able to claim:

  • a 130% super-deduction capital allowance on qualifying assets and machinery investments
  • a 50% first-year allowance for qualifying special rate assets

The biggest business tax cut in modern British History

This super-deduction allows companies to cut their tax bill by up to 25p for every £1 they invest. With this scheme in place, companies are expected to benefit to the tune of £25 billion over the next two years. As the pandemic has released many economic shocks throughout the UK accompanied by much uncertainty, this super-deduction tax relief will encourage many businesses to spur investments that will help them grow and get back on track. However, the deduction will only apply to “companies investing in qualifying new plant and machinery assets” rather than intangible assets.

The super-deduction allows any limited business to deduct the full value of qualifying assets from profits before tax. Rather than over several years, the full tax relief is received the same year the assets are purchased, therefore reducing your tax liability. This scheme will provide significantly faster tax relief for investments up to £1 million, further helping businesses expand, invest and grow. 

Corporation tax is a tax on profits only, not turnover. Therefore, it is only a tax on businesses that are thriving. Although many businesses have struggled during the rise of COVID-19, many businesses have also had a lot of support from the government over the last year, as the government’s relief measures have meant that companies haven’t had to draw from their own reserves. and there will be more businesses statistically thriving than a lot of people may realise. 

The super-deduction will end in 2023, which means companies have two years to take advantage of this scheme before the super-deduction window of opportunity slams shut. After march 2023, corporation tax will rise to 25%, so the government can begin to earn back some of the money that was spent during the height of the pandemic. Rishi Sunak explained how the increase of corporation tax is “fair and necessary” in order for businesses to contribute to the UK’s recovery due to how much support they received throughout the pandemic. 

Click here to read our articles on Samera Learning centre.

Example Super-Deduction

Below you can find an example of how this super-deduction can benefit your dental practice. In this example, we take a look at the difference in tax savings when a sample dental practice invest in inventory on or before 31st March 2021 compared to on or after 1st April 2021.

Date of Purchase31st March 20211st April 2021
Cost£2.5mil£2.5mil
Inventory allowances:
£1mil at 100%£1mil
£1.5mil at 18%£270K
£2.5mil at 130%£3.25mil
Total allowances available£1.27mil£3.25mil
Corporation tax benefit at 19%£241.3K£617.5K
Tax saving£376.2K

Contact Our Asset Finance Team

Before this amazing tax opportunity ends, we urge businesses, especially dental practices to increase your investments while you get the 130% tax relief. Two years will fly by quicker than you know. By then the tax relief door will be slammed shut and corporation tax will increase. The benefits to your business will be endless. If you are interested in investing in assets for your business with the 130% tax relief, get in touch with our in house experts that can help you with the asset finance you may need. The team here will happily guide you through the process and offer advice and tips that will be integral for your business to thrive during this opportune moment. 

Click here to find out more about our Asset Finance services.

Commercial Loans for Healthcare Businesses

We’ve been helping to fund the future of British healthcare businesses for over 20 years and our team are made up of former bankers with decades of experience in the UK’s healthcare lending sector.

You can find out more about working with Samera and the financial services we offer by booking a free consultation with one of the Samera team at a time that suits you (including evenings) or by reading more about our financial services at the links below.

For more information on raising finance for your healthcare business, including more articles, videos and webinars check out our Learning Centre here, full of articles and webinars like our How to Guide on Financing a Dental Practice.

For all our previous webinars and video updates, subscribe to our YouTube channel and follow us on Facebook, LinkedIn and Instagram.

2021 Year End Tax Planning – Can you become an ISA Millionaire?

It’s that time of year again when one needs to consider all their tax saving options.

In truth, there are maybe two major things you need to be considering, ISA and pension contributions.

If you have not contributed to either of these, then it’s definitely worth considering. My personal favourites are ISA’s as you can still have an instant access to the cash, yet income and capital growth is tax free.

If you invest wisely, it’s possible to build a very large ISA holding which you have not paid any tax on at all – on the income or the capital growth. Your goal should be to build a large ISA holding and if you start early in your career, it’s pretty likely you can become an ISA millionaire!

Don’t forget about Junior ISA’s too

In addition, if you have children, make sure you are using their junior ISA allowances too. Currently, you can invest up to £9000 tax free into a junior ISA – again a no-brainer if you are thinking of saving for their futures.

Of course, pensions have the benefit of providing tax relief but you cannot access the funds until 55.

Both offer excellent options to be tax efficient, so if you have not used your allowances this year and have cash to invest, start with either (or both) of these two options!

Summary of details below:

ISA v pensions-
Benefits at a glance
ISAPension
Can I have instance access?

Yes
No access before age 55 unless due to severe ill health or protected retirement age
How much can I pay in?

£20,000 each tax year£3,600 gross or 100% of net relevant earnings (whichever is higher) subject to annual allowance limits
(currently £40,000 but can be lower for high earners)
What is the tax treatment in the fund?

Tax-efficient growth Tax-efficient growth
What tax relief is available on your contributions?

NoneImmediate 20% available

Higher/additional rate taxpayers can claim further relief via self-assessment
What happens on death?Full value is included in your estate for Inheritance Tax (IHT) purposesPension funds not currently included included in estate for IHT purposes

Death benefits are tax free if paid before deceased’s 75th birthday, but subject to beneficiary’s marginal rate of tax if deceased was over 75 at date of death

Further Information on Accounts & Tax

Our team of specialist accountants and tax experts can help manage, process and structure your business’s finances. From management accounts and payroll & pensions to tax planning and cash flow management, we can take care of the full back-office function of your business.

Book a free, no-obligation consultation with one of the team to find out how we can make your accounts & tax easier, quicker and cheaper.

For all our previous articles, webinars and video updates, subscribe to our YouTube channel and follow us on Facebook and Instagram.