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.

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!  

How to finance a healthcare business

Healthcare providers have a specific set of funding needs and often benefit from tailored solutions. There are so many ways to raise funding for your healthcare business beyond dipping into your savings. In order to fully understand the best course of action in financing your healthcare practice, we have compiled a list of the criteria you will need to navigate yourself around the process from start to finish. 

What is healthcare funding?

Healthcare funding is any type of finance arrangement taken out by businesses in the healthcare sector to fund a specific need to their business / industry: 

Borrows include:

  • Pharmacies
  • Private hospitals
  • Dental surgeries GP surgeries
  • Day care services
  • Special needs schools
  • Opticians
  • Veterinary surgeries

What does a healthcare business need to fund? 

The healthcare industry is a huge industry in the UK including private clinics, the ongoing NHS system, paediatric care facilities, edlery care and pharmacies. The healthcare industry has immense investment potential due to the importance of it in everyone’s lives especially in the current climate. 

Healthcare businesses are becoming more and more important as there is now more space within the healthcare sector for your business to grow. Businesses can now avail of this funding to push themselves further into the mainstream healthcare market. 

As healthcare is a very diverse sector covering a wide range of businesses, funding needs are equally varied. You need finances to fund:

  • Any mergers and acquisitions
  • Purchase new surgeries and clinics
  • Assist with cash flow, growth and cost savings
  • Acquire medical drugs and products 
  • Expand or convert an existing property

The following are things your healthcare practice will need to fund: 

  • Property (buy/rent)
  • Equipment/stock (PPE, drugs etc)
  • Large medical assets (surgery chairs, scanners etc)
  • Staff
  • Working capital
  • Marketing
  • Associated costs (legal, accounting, hr etc)

How to apply for finance for a healthcare business

When you apply for finance, lenders will need to see various documents including your business plans and other documents relating to your cash flow and business prospects. You will need to show:

  • Business asset and liabilities statement 
  • Three years business accounts (if applicable)
  • Business management figures
  • Six months of business bank statements
  • Complete details of NHS contract and performance indicators. 
  • director/ partner payslips for the last three months of your latest p60 with six months of personal bank statements if you are a contractor 

Creating a Business Plan

A business plan is more than a documented plan. It is a very important guide that helps you outline and achieve your goals. It is also an important management tool that allows you to analyse results, make strategic decisions and showcase potential lenders how your business will operate as well as grow and profit. 

Essentially, writing a business plan will improve your businesses chances of securing necessary funding and becoming successful. 

Your business plan should be at the forefront of everything you do when approaching lenders and considering any type of loan / financing options. This business plan needs to be in depth and attached to any application you submit. 

Your business plan should be the first thing you complete, it is a great start for you before you tackle the rest of your application as should be done to a great standard if you hope to be given any funding. 

What funding is available for healthcare businesses?

Secured vs unsecured loans

There are two main types of loans which are either secured or unsecured. 

Secured loans refer to businesses that borrow money and use an asset as security to pay back that loan. If  the repayments are unable to be made, the lender is able to sell the asset in order to get their money back. 

Unsecured loans are when your business borrows money without using any of its assets as security. 

Essentially, the less you borrow, the quicker you are expected to pay it back. If the amount you borrow is a significantly larger amount, you are able to pay it over a longer period of time. 

It is important to note that not all business loans are the same and you need to ensure that the terms of your particular loan is right for your situation. Whether you are a start-up or a small business, you can get a loan that is suitable and specifically designed for you. 

Asset Finance

Asset finance is a cost effective, low risk way of acquiring new premises or high value equipment. Whether you are a start-up or you are looking to expand. Asset finance helps you optimise cash flow while you prepare for growth and gives you access to all the latest medical technology.  

Your asset finance payments cover the value of any equipment you need including interest and any additional fees charged by the lender. 

Eligible Assets

You can take out asset finance for a wide range of medical equipment, as well as non medical assets used to support your healthcare business for example: 

  • Automation systems 
  • Operating theatres
  • Corrective laser eye therapy machines
  • Dental chairs and surgical equipment 
  • Diagnostic scanners e.g. MRI, CT and X-ray machines

Asset Refinance 

A good way to increase liquidity is by using a medical asset you already own as collateral for a cash loan worth the resale value of the asset. This is a great form of bridging finance when waiting for a commercial mortgage or a longer term loan or as an alternative to invoice finance.  

Hire purchase or leasing 

One of the biggest attractions of using asset finance is that there is no need for capital outlay or any security needed. Instead the new asset is either hired or leased from a leasing company. 

Leasing means the asset needs to be returned to the leasing company after the contracted period has ended or exchanged for a newer version of the asset, in which case the lease continues on similar terms. 

Hire purchase agreements are a bit different as you acquire full ownership of the asset at the end of the payment term. 

Acquisition Finance

Acquisition finance is the capital that is usually obtained for the purpose of buying another business. By acquiring another company, a smaller company can increase the size of its operations and benefit from the economies achieved through the purchase. Throughout the numerous changes over the last couple of pandemic years there are now various new lenders for acquisition finance accompanied by new deal structures and new lending criteria. 

Acquisition financing will allow you to gain capital specifically for the purpose of buying your new premises or equipment for your business. We can guide you through the best cost effective ways to do this and mentor you through how it will affect you and your business. 

Commercial Mortgages

Commercial mortgages are similar to regular mortgages in many ways but there are a few features that make them slightly different. These differences include the interest rate being slightly higher than regular residential mortgages as these types of mortgages are of a higher risk to lenders. Due to this risk, you usually would need to provide an asset such as a property as collateral which will allow your lender to give you a better interest rate. Your interest rate will also be dependent on how much your loan is worth and how long you plan to pay it back, amongst many other factors your lender will later decide on. 

Deposits for commercial loans or mortgages can often be quite hefty so, before you apply for your commercial loan you need to ensure that you will be able to pay both the deposit and your monthly instalments back comfortably and assure your lender of this. 

Tax Loans

A lot of business owners are not aware of the options that are available to them when they do not have enough to pay the necessary tax bills.tax loans are incredibly helpful and convenient to help you pay your tax bill on time. 

VAT funding can be very useful when quarterly VAT payments are due and there is limited cash flow available to secure paying the bill. VAT funding enables businesses to pay your quarterly tax payments over the course of an agreed term (usually 12 months). This will usually be paid back over a series of monthly payments. Unlike many other loans, detailed business plans and security assets are not necessary for this type of loan. Many processes are quick and flexible with great affordability and transparency. 

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.

Samera Nominated for Broker of the Year 2021

We are thrilled to announce that Samera Finance has been nominated for Commercial Mortgage Broker of the Year 2021 by NACFB.

The Commercial Broker Awards recognise excellence in the intermediary community.

The winners will be announced and presented with trophies at an awards ceremony on Wednesday 29th September at Edgbaston Cricket Ground – the day before Commercial Finance Expo 2021 (CFE 2021).

Whether or not we are lucky enough to win, we are honoured by the nomination, which reflects everything we’ve managed to help our clients with this year.

If you’d like to find out what makes Samera award nominee-worthy, contact us or book a free virtual consultation with our finance team at a time that suits you.

Business Loans for Dentists

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

You can find out more about working with Samera Finance 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.

Dental Practice Finance: Further Information

For more information on raising finance for your dental practice, including more articles, videos and webinars check out our Learning Centre here, full of articles an 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.

Our Experience Makes Your Experience Better

Most of us have an area of expertise. That expertise has been gained from years of experience working in various industries and professional environments.

When you are talking through a proposal do you ever ask the person you are talking to what their experience of the situation is? I am sure that they ask you for details of your experience!

Check Them Out on LinkedIn

LinkedIn can be used to see how long someone has worked in an industry – what their experience is in that role and other roles.

We are constantly hearing from clients that they have been told they can achieve a loan of this term or an interest rate of that, contrary to what we are telling them.

When that happens, check out the person’s knowledge.

Make sure they are not selling you an image of what can be achieved. If it’s too good to be true, it probably is. Quite often that image turns out to be false, but by then it’s too late.

You have signed up and are committed to working with them and in the end you only achieve what can be realistically achieved.

We have 200 Years’ Experience

The finance team at Samera Finance have 200 years of banking experience between the five of us, and of that some 65-70 years of experience in healthcare.

If you want to build a healthcare business, buy a dental practice, invest in a GP practice or buy a Pharmacy then we can assist.

Independent of any one lender, we will approach several lenders to obtain finance over a reasonable term and at a rate that will enable you to make your business a success.

Use our experience to make your experience better.

Business Loans for Dentists

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

You can find out more about working with Samera Finance 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.

Dental Practice Finance: Further Information

For more information on raising finance for your dental practice, including more articles, videos and webinars check out our Learning Centre here, full of articles an 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.

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.

Rishi Sunak’s Budget Update

The Dental Business Guide Podcast Episode | 3rd March 2021
Arun Mehra

Good afternoon. It’s Arun Mehra here on the 3rd March from the Dental Business Guide and I’ll be talking to you about the budget that was announced earlier today by Rishi Sunak. Now, there was a lot of expectation around this budget, with various bits of information being leaked before the budget. But now more details have emerged today and I’m just going to give you a quick summary of the key points that I think affect the dental sector in particular.

As more information comes out, I will be sharing more information on our websites and maybe on this podcast as well. 

So firstly, in respect to the Coronavirus support that’s available from the government – certainly furlough has been extended until the end of September and the government will continue paying 80% of employees salaries for the hours they cannot work.

Employers will have to then also contribute 10% in July and 20% in August and September. So, as we expected, this is something that will help businesses generally for people who’ve got people on furlough, which will pay for them. In addition, support for self employed will also be extended until September.

Now interestingly, I think we are coming out of this pandemic, by the end of June, hopefully, when all the restrictions will be lifted. But this is going to go to the end of September as businesses will reopen. So that, I guess, is a positive sign. 

Now in terms of the state of the economy, and generally about the finances, we saw the economy shrink by about 10% in 2020. There is an expectation of it to rebound. And the Treasury’s hoping in 2021, the annual growth rate will be around 4%, which will hopefully then grow even beyond that after 2021. 

Current borrowing at the moment just out of interest is around £234 billion for the period 2021-22.

Now, the all important area of taxation. I know a lot of our clients are always interested to understand what’s the impact on them, on their personal taxes, on their personal take home pay. There’s been no changes to the rates of income tax, National Insurance, or even VAT. The personal income tax allowance has been frozen at the current rate at 12,570 from 2022 all the way to 2026.

However, that’s likely to change I guess, as we go along – that’s a long time away to happen. In addition, high-rate income tax threshold has also been frozen at 50,270 until 2026 as well.

The area that has changed (and this is a significant) area is that corporation tax will be changing. So by 2023, the highest rate of corporation tax will be 25%. Now, what does that really mean? I suppose there’s a kind of a taper here. So that the companies that are earning a lower rate of tax will still be taxed at 19%. And that’s the vast majority of companies and those companies who are earning under 50,000 pounds a year. But companies who have a high profitability, they’re tapered up to the rate of 25%. So anyone earning in excess of profits of 250,000 pounds, I believe, will be taxed at 25%.

In addition on the tax side of things, the stamp duty holiday on house purchases in England and Northern Ireland had been extended to June, which was kind of what we expected as well. And there will be no changes on inheritance tax or lifetime pension allowances, or even capital gains tax – because I know there was a lot of concern about capital gains tax changing. And an entrepreneur’s relief perhaps being removed – that has not happened thus far in this budget.

And then I suppose finally some other aspects on the business side of things is government really wants to encourage business. That’s what kind of the message I got from this, whether it will have the impact of what it desires – that’s another story. But one of the things he’s trying to do is encourage people to invest in equipment, invest in infrastructure, invest in new items.

They’re saying if for instance, you’ve invested 10,000 pounds in equipment, you’ll be able to get 130% of that, 13,000 pounds worth of that, as a deduction in your tax bill. So that’s a huge incentive. If you’ve got to kit out a dental clinic or business, you’re doing a new surgery, there’s a huge investment opportunity or a tax opportunity to reduce your tax bill as well.

In addition, there’s the other area to look at – business rates. The holiday for that continues in England until June with, 75% discount after that. 

So, I suppose in summary, we are in a pandemic, still, I think they’ve tried to minimise the impact of tax rises on income tax personal, especially individual.

Inevitably, there will have to be some tax rises, that’s going to impact the larger corporates in a couple of years time.

I guess we will see and hopefully we will grow back. One last thing I haven’t mentioned is they want to encourage and train people in more business knowledge, business acumen to help businesses grow on the digital front and also in just general management side of things as well. 

So some new incentives and new schemes that are being launched there today, which are worth looking for. And you can find out about those on gov.uk/helptogrow

So in summary, an interesting budget. I suppose there will be some deductions and benefits for businesses out there. It’s good that income tax hasn’t risen. Corporate tax will be impacting on the larger businesses in a few years time.

Hopefully, this will encourage the economy to grow and to get back on its feet post pandemic. Now if you have any questions on this or want further detail, get in touch with me via the samera.co.uk website and I look forward to hearing from you soon. Okay, and check out our next podcast soon.

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.

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How lenders want you to manage and develop a start up

In order for a lender to approve an application for finance for the purchase of premises for a squat, build work or equipment, they require a mandatory background check on you as well as the plans for your business, but they have certain internal guidelines that they want you to adhere to when formulating your plans.

The Current Lending Market

During the rise of the pandemic, many lenders have withdrawn from this market as they see the startup proposition as too risky. There is no doubt that they will return to the market in the next few months however, in the meantime other avenues of finance have to be utilised.

With the bad also comes some good as sourcing a site has become a little easier recently with the changes to the planning designations as, in many cases, has now removed the need to obtain a change of use for the property in turn, saving you a lot of time.

What lenders are looking for

They will be looking for you to only set up one surgery in its entirety at the outset as generally for most squat practices the number of clients will be minimal initially and this will grow over time. The logic of this is clear in that there is little point in setting up 2-3 surgeries with all the necessary equipment as the expenses of this are then wasted when they are not used.

They will be happy however to allow you to divide the property during the refurbishment and install the correct fire doors, flooring, water, and electricity supply to the additional surgeries. This means that as the practice grows it is possible to expand by fitting an additional surgery quickly.

They will want you to obtain 2-3 build quotes and would prefer that you use an experienced dental builder who has a good history of work in the dental sector and may be known to the lender. They will also want the build to be sensible keeping costs as low as you can without compromising the quality and finish that is required. 

You need to look carefully to ensure that all fire requirements and ventilation levels meet new requirements to deal with Covid-19. These should be reviewed carefully with regard to air filtering to reduce down times and ensure that all the various standards set by CQC are achieved. It is also important to look carefully at the cost aspects of your dental practice such as waiting room interior, reception desks and any other decoration and ensure it is of a good standard within your budget.

The same applies to equipment costs, you should shop around first to compare different prices to ensure you opt for the best price for the equipment you need. If it can be deferred to a later date do so to ensure that you keep your fixed costs at the outset as low as possible.

Financial Projections

The financial projections that lenders require must be in a well laid out format showing both profit and loss and cash flow for a three-year period which will identify the way the business will move forward for both parties involved. With limited income and plenty of fixed costs on the day of opening, losses will probably be incurred in the first few months until income grows to a level sufficient enough to break even and then make profit. This turnround to profit usually happens around 6-8 months of the practice opening. 

Tips to reassure a lender

So, how can you reassure the lender this will be a success:

  • Try and negotiate a rent-free period of leasing to enable you to complete the work and open.
  • Seek an interest only period from the lender if possible.
  • Keep staff costs down at the outset and employ a nurse and receptionist only.
  • Maintain an associate role elsewhere – you may only be at the new practice 1-2 days in the first few months – working elsewhere for the rest of the week will bring in income to cover household expenses if necessary and provide funds to inject into the business to cover initial losses.
  • Have spare funds available to cover any losses, these can be put into the business at the outset.
  • Robust plans for marketing and branding your business. Start marketing once the build begins.
  • Plan to use professionals – Dental builders / solicitors / accountants / brokers.
  • If bringing clients or extra income into the business at the outset – set out who they are and why they are coming – check your associates contract to ensure no conflicts of interest.
  • If more than one dentist is involved, then this assists income / work share. 

Utilise the skills and knowledge of others to assist you in this venture, they have seen the challenges before, and they have dealt with them and know what the lenders want from you and the plans.

Work with people or firms who have experience of start-ups. Attending courses will help prepare you for the challenges you may face. 

If you ensure that you control costs and carry out the proper investigation of competition, location and use professionals with experience of the sector and you obtain accurate and realistic projections, you will provide yourself with the best chance of obtaining finance and of starting a successful dental practice.

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.

Why Now May be the Best Time to Refinance

In these uncertain times that we are currently experiencing, of furloughs, lockdowns and COVID-19, we have seen extra pressure on business finances.  

Having spoken to several clients, it’s our view that this may be a good opportunity to review your current financial arrangements, such as your existing business loans.

Please click here to find out more about refinancing with Samera.

Why Would You Want to Refinance Your Existing Loan Facility?

Why would you want to refinance your existing business loan? You may find that you can now achieve a better rate or term than you originally received on your existing facility.

Many lenders base their lending criteria on the length of time your business has been operational and the business profits. As your business matures and becomes more profitable, you will likely be eligible for better interest rates and terms.

By reducing the interest rate or changing the length of your repayment term via refinancing, this could help free up working capital for your business, as well as save you money over the term of your loan.

Review Your Costs

Review your costs and see if any of your financial obligations can be extended to ease the pressure today.

Look at the assets you may have bought in the last six months. Did you buy these from your cash flow? If so, they could be financed over a longer period, reducing your monthly outgoings.

Asset purchase covers a multitude of items. From cars to equipment, many of these items can be financed over 5 – 7 years if they were purchased recently.

So, go through your recent asset purchases and figure out which of them can be refinanced to ease your current expenses.

How do you Refinance Your Existing Business Loan?

This is the area where we can help!  We have a panel of lenders that would be able to assist you with refinancing your existing business loans. 

By refinancing to the correct lender, you can achieve your goal of reducing the overall loan payments that you are currently making on your business facility. 

What information will the lenders need to take forward your application: 

Personal Profile Forms

This gives lenders an understanding of an individual’s financial background, it sets out what current liabilities they have and breaks down personal assets. 

Personal & Business bank statements

These help to verify your personal & business monthly income and expenditure. A good bank account conduct is a huge positive for lenders when assessing any application. 

Three years of financial accounts

These are used to demonstrate the business profitability, the bank must verify that the lending will be serviceable. Displaying a strong financial performance by the business over a period helps assist with a positive lending decision.  

Existing loan details

Such as; reason for the original loan, existing balance, monthly payment, Interest rate, remaining term, and early prepayment penalties (if any).

You may also be interested in consolidating multiple business loans and refinancing them into one facility, this would allow you to benefit from better terms on all your business lending.

Some clients have purchased business assets from their working capital instead of using finance. This can put pressure on a business’s cash flow.  You could, instead, explore this area and re-finance recently purchased assets onto a finance agreement, meaning that the items can be funded over a longer term. 

Now is the Time to Refinance

Review your main costs now and look at your loan payments for the purchase of your business and/or property.

This is the time to review those costs.

  • Is the interest rate too high?
  • Can it be renegotiated?
  • Could the repayment period be extended?
  • Could you ask for a period of interest-only?

Doing any of these will reduce your monthly costs during the current challenges.

Up-to-date accounts and management information are crucial when you are looking to help your cashflow, as lenders will need to see the present position and understand how your trading will look in the future.

Click here to read our blog on How to finance a healthcare business.

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.