Bookkeeping Tips for Dentists

Simplifying Bookkeeping and Payroll: Essential Tips for Dentists

Running a successful dental practice involves more than just being a good dentist. You also need to take care of your money. Keeping track of your finances and managing your payroll are important, but they can be complicated and take up a lot of time.

As a dentist, your time is valuable and should be spent on treating your patients well. That’s why it’s important to simplify your financial tasks. In this article, we’ll give you essential tips and methods to help you make your financial tasks easier. We’ll talk about everything from choosing the right accounting software to outsourcing your financial tasks. By following these tips, you’ll be able to improve your financial management and focus on providing good dental care to your patients.

The Importance of Simplified Bookkeeping and Payroll for Dentists

Running a dental practice comes with many responsibilities, and one of the most important aspects is managing your practice’s money properly. As a dentist, it’s crucial to understand your practice’s finances and follow the rules for the dental industry and the UK’s tax codes.

Effective financial management doesn’t just help your dental practice run smoothly; it also plays a crucial role in maintaining financial stability and complying with legal requirements. By simplifying these aspects of your business, you can save time, reduce stress, and focus more on providing quality dental care to your patients.

Accurate accounting helps you keep track of your practice’s income and expenses, keeping your financial records up-to-date and organized. This is important for making informed business decisions, managing cash flow, and preparing financial reports. Improved accounting also ensures that you meet all tax obligations, including sales tax and income tax, preventing potential penalties or legal issues.

Managing payroll is equally important for dentists. As a business owner, you have legal responsibilities to your employees, including making accurate payroll calculations, making timely payments, and complying with labor laws. By simplifying your payroll process, you can ensure that your staff are paid correctly and on time, reducing the risk of disputes or legal complications.

Implementing streamlined accounting and payroll systems can also benefit your dental practice in terms of efficiency and productivity. By using modern accounting software or hiring professional accountants, you can automate repetitive tasks, such as data entry and payroll calculations. This not only saves time but also reduces the chances of errors, allowing you to focus on providing excellent dental care to your patients.

In summary, improved accounting and payroll are essential for dentists to ensure financial stability, compliance with regulatory requirements, and efficient practice management. By paying attention to these aspects of your business, you can streamline your operations, reduce stress, and allocate more time to delivering excellent dental services to your patients. In the following sections, we will explore practical tips and strategies to help you simplify your accounting and payroll processes, empowering you to take control of your dental practice’s financial well-being.

Action points

  • Implement streamlined accounting and payroll systems.
  • Use modern accounting software or hire professional accountants.
  • Automate repetitive tasks, such as data entry and payroll calculations.
  • Keep your financial records up-to-date and organized.
  • Make informed business decisions based on your financial data.
  • Manage cash flow effectively.
  • Prepare financial reports accurately.
  • Meet all tax obligations, including sales tax and income tax.
  • Make accurate payroll calculations.
  • Pay employees correctly and on time.

Click here to learn more about our accounts services for dentists.

Understanding the Specific Bookkeeping and Payroll Requirements for Dentists

As a dentist, it’s important to know the unique financial rules that apply to your job. Dental practices have their own money-related considerations that are different from other businesses. Being aware of these details will make it easier to manage your finances.

One crucial thing to think about is the money coming in and going out. In dentistry, you might have various sources of income, like patient fees, payments from government healthcare programs, and insurance payments. It’s essential to keep accurate records of all these income sources for proper financial reporting.

Dental practices also have various expenses, such as staff salaries, dental supplies, equipment maintenance, and rental costs. Keeping detailed records of these expenses will not only help with accurate financial reports but also identify areas where you can save money and plan your budget.

Besides income and expenses, dentists need to follow the rules set by organizations like the General Dental Council (GDC) and HM Revenue and Customs (HMRC). These organizations have specific requirements for record-keeping and tax obligations. Failing to meet these requirements can lead to penalties and legal problems. So, it’s crucial to stay updated on the latest rules and make sure your financial processes follow the necessary guidelines.

To simplify your financial management as a dentist, consider using specialized accounting software designed for dental professionals. These software solutions often have features that cater to the unique needs of dentists, such as tracking lab fees, managing patient records, and generating reports tailored to the dental industry. Implementing such software can streamline your financial processes, save you time, and reduce the chances of errors.

By understanding the specific financial requirements for dentists, you can ensure accurate financial records, compliance with regulations, and more efficient management of your dental practice’s finances. Improving these processes will not only save you valuable time and effort but also contribute to the overall success and stability of your dental business.

Action points

  • Keep accurate records of all income sources and expenses.
  • Use specialized accounting software designed for dental professionals.
  • Stay updated on the latest financial rules and regulations set by dental organizations and tax authorities.
  • Outsource financial tasks to professional accountants, if needed.
  • Use financial data to make informed business decisions and improve cash flow management.

Click here to learn more about Making Tax Digital for dentists.

Choosing the Right Accounting Software for Efficient Record-keeping

Choosing the right accounting software is crucial for dentists to maintain efficient record-keeping practices. Thanks to technology advancements, dentists have various options to choose from, each with its own unique features and benefits.

First, it’s important to consider your dental practice’s specific needs. Look for accounting software designed for healthcare professionals, offering features like invoicing, expense tracking, and payroll management. This ensures you have a comprehensive system that can handle all your financial and payroll requirements.

Another important factor to think about is how easy the software is to use. As a dentist, you may not have extensive accounting knowledge or experience, so it’s essential to choose user-friendly software that is easy to navigate. Look for features like a simple interface, clear instructions, and helpful customer support to make the transition to using the software smooth.

Integration capabilities are also worth considering when selecting accounting software. Look for software that can seamlessly work with other systems you use in your dental practice, such as appointment scheduling or patient management software. This will save you time and effort by eliminating the need for manual data entry and ensuring that all your systems work together smoothly.

Security should be a top priority when choosing accounting software. As a healthcare professional, you handle sensitive patient information, so it’s crucial to pick software that prioritizes data security and confidentiality. Look for software that offers encryption, regular data backups, and strong access controls to protect your financial and patient data.

Finally, consider your budget when selecting accounting software. There are both free and paid options available, so it’s important to weigh the features and benefits against the cost. While free software may be tempting, keep in mind that paid options often offer more robust features and better customer support.

By carefully considering these factors and choosing the right accounting software, dentists can streamline their accounting and payroll processes, saving time and ensuring accurate financial records for their practices.

Action points

  • Consider your dental practice’s specific needs, such as features like invoicing, expense tracking, payroll management, and integration with other systems.
  • Choose software that is easy to use and navigate, with a simple interface, clear instructions, and helpful customer support.
  • Prioritize data security by choosing software that offers encryption, regular data backups, and strong access controls.
  • Consider your budget when weighing the features and benefits against the cost.
  • Free software may be tempting, but keep in mind that paid options often offer more robust features and better customer support. We recommend looking into Xero and Sage.

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Did You Know?


  • Dentists in the UK must keep accurate financial records for all business transactions. This requirement is set out in the General Dental Council (GDC) Standards for Dental Professionals (2019), which state that dentists must “keep accurate and up-to-date records of all your financial transactions, including income and expenditure.”
  • Dentists in the UK must deduct tax and National Insurance contributions from their employees’ salaries. This is required by the Income Tax (Earnings and Pensions) Act 2003 and the National Insurance Contributions Act 2010.
  • Dentists in the UK must submit VAT returns to HMRC quarterly. This requirement is set out in the Value Added Tax Act 1994.
  • Dentists in the UK must submit payroll information to HMRC monthly. This requirement is set out in the Pay-as-You-Earn (PAYE) Regulations 2003.
  • Dentists in the UK must also submit an annual tax return to HMRC. This requirement is set out in the Income Tax (Self Assessment) Act 1996.

Click here to watch our webinar on automating your finances with Xero.

Organizing and Categorizing Expenses for Easy Tracking and Tax Purposes

When it comes to handling the money side of your dental practice, organizing and sorting your expenses is important for easy tracking and tax purposes. Keeping your expenses clear and properly categorized helps you stay organized and ensures you’re taking advantage of all eligible tax deductions.

To make this process easier, start by setting up a system to record and categorize your expenses. This can be as simple as using a spreadsheet or investing in accounting software designed for small businesses. Make sure to create categories that match the tax rules in the UK, such as office supplies, equipment, professional services, and marketing expenses.

To stay on top of your expenses, establish a regular schedule for recording and categorizing them. Allocate dedicated time each week or month to review your receipts, invoices, and financial documents. This will help you identify any missing or undocumented expenses and ensure that everything is accurately categorized.

In addition to organizing and categorizing expenses, it’s essential to keep all relevant documents in a reliable and easily accessible place. This includes receipts, invoices, bank statements, and any other financial records. Having these documents readily available will make it easier for you to provide accurate information during tax season and any potential audits.

By focusing on the organization and categorization of expenses, you’ll simplify your accounting and payroll processes and ensure compliance with tax regulations. This will give you peace of mind and allow you to focus on providing quality dental care to your patients.

Action points

  • Set up a system to record and categorize your expenses, such as using a spreadsheet or accounting software.
  • Create categories that match the tax rules in the UK, such as office supplies, equipment, professional services, and marketing expenses.
  • Establish a regular schedule for recording and categorizing expenses, such as each week or month.
  • Keep all relevant documents in a reliable and easily accessible place, such as receipts, invoices, bank statements, and other financial records.

Click here to read our guide on expenses for dentists.

Streamlining Payroll Processes for Dental Staff

As a dentist, managing the payroll for your dental staff can be a time-consuming task. However, streamlining your payroll processes can help you save time and ensure accuracy in your financial records. Here are some basic tips to improve your dental staff payroll:

  • Use payroll software: Invest in reliable payroll software designed specifically for small businesses. This software can automate various payroll tasks like calculating wages, deductions, and tax payments. It will also generate pay stubs for your dental staff, making the process more efficient and error-free.
  • Create a consistent payroll schedule: Establish a consistent payroll schedule, such as bi-weekly or monthly, and clearly communicate it to your dental staff. This will help them know when they will be paid, reducing any confusion or inquiries.
  • Implement direct deposit: Encourage your dental staff to sign up for direct deposit, where their wages are electronically transferred directly into their bank accounts. This eliminates the need for physical checks, reduces the risk of loss or theft, and saves time on manual check distribution.
  • Maintain accurate employee records: Keep detailed records for each dental staff member, including personal details, tax information, and employment contracts. This ensures that you have all the necessary information readily available for payroll calculations and reporting.
  • Stay updated with payroll regulations: Payroll regulations and tax rules can change frequently. It’s important to stay informed about any updates that may affect your dental staff’s wages and deductions. Consider consulting with a professional payroll service provider or an accountant to ensure compliance with the latest regulations.
  • Automate tax calculations and filings: Tax calculations can be complex, especially when considering deductions and allowances specific to the dental industry. Use payroll software that can automatically calculate taxes based on the latest tax rates and rules. Additionally, consider automating your tax filing process to ensure timely and accurate submissions.

By implementing these tips, you can streamline your dental staff payroll processes, reduce administrative burdens, and ensure accurate financial records for your dental practice. Simplifying accounting and payroll will not only save you time but also contribute to the overall efficiency and success of your dental business in the UK.

Action points

  • Invest in payroll software designed specifically for small businesses.
  • Establish a consistent payroll schedule and communicate it to your staff.
  • Encourage your staff to sign up for direct deposit.
  • Keep detailed records for each staff member.
  • Stay updated with payroll regulations and tax rules.
  • Automate tax calculations and filings.

Click here to learn more about our payroll services.

Implementing Automated Systems for Accurate and Timely Payments

Using automated systems for accurate and timely payments can be a great benefit for dentists. Managing finances and payroll can often be time-consuming and prone to mistakes, leading to unnecessary stress and financial difficulties.

By using automated systems, dentists can streamline their payment processes and ensure that employees and suppliers are paid correctly and on time. This not only saves valuable time but also helps maintain positive relationships with staff and vendors.

One effective way to implement automated systems is by using accounting software specifically designed for dentists or small businesses. These software solutions are tailored to the unique needs of dental practices, offering features like automated payroll calculations, invoice generation, and expense tracking.

With the help of such software, dentists can easily input employee hours, track leave entitlements, and calculate deductions for taxes and benefits. This eliminates the need for manual calculations and reduces the risk of errors in payroll processing.

Moreover, automated systems can integrate with online payment platforms, allowing dentists to electronically pay suppliers and contractors. This ensures prompt payments and provides a convenient and secure method for financial transactions.

Additionally, automated systems can generate detailed reports and summaries, providing dentists with valuable insights into their practice’s financial health. These reports can help identify areas for cost savings, track revenue streams, and monitor overall efficiency.

In summary, implementing automated systems for accurate and timely payments is a crucial step in simplifying accounting and payroll for dentists. By embracing technology and streamlining financial processes, dentists can focus more on providing quality dental care while ensuring the financial stability of their practice.

Action points

  • Use accounting software specifically designed for dentists.
  • Input employee hours and track leave entitlements to automate payroll calculations.
  • Integrate with online payment platforms to electronically pay suppliers and contractors.
  • Generate detailed reports and summaries to monitor financial health and identify areas for improvement.

Click here to learn more about how to organise your dental practice finances.

Staying Compliant with HMRC Regulations and Reporting Requirements

Staying in line with HMRC (His Majesty’s Revenue and Customs) rules and reporting requirements is important for dentists in the UK. As the owner of a dental practice, it’s your responsibility to make sure that your financial and payroll processes follow the specific rules set by HMRC.

One of the first steps to stay compliant is to register your dental practice with HMRC. This will allow you to get a Unique Taxpayer Reference (UTR) number, which is essential for all tax-related communication.

Next, you need to establish a strong accounting system that accurately records all financial transactions and keeps the necessary documents. This includes keeping track of income, expenses, invoices, receipts, and any other important financial records.

Staying updated with payroll regulations is also crucial. This involves correctly categorizing your dental staff as employees or self-employed contractors and ensuring that their wages are calculated accurately, including any deductions for taxes and national insurance contributions.

In addition to accurate record-keeping, you must also meet reporting requirements set by HMRC. This includes submitting timely and accurate VAT returns, payroll information, and annual tax returns. Failure to meet these obligations can result in penalties and potential legal issues.

To simplify the process, consider using advanced accounting and payroll software designed specifically for dentists. These tools often come with features that automate calculations, generate detailed reports, and remind you of important deadlines.

Staying compliant with HMRC rules might seem overwhelming, but with proper organization and the right tools, you can streamline your financial and payroll processes, ensuring that you meet all requirements and avoid any unnecessary penalties.

Action points

  • Register your dental practice with HMRC and get a Unique Taxpayer Reference (UTR) number.
  • Establish a strong accounting system that accurately records all financial transactions and keeps the necessary documents.
  • Stay updated with payroll regulations and correctly categorize your dental staff as employees or self-employed contractors.
  • Ensure that your dental staff’s wages are calculated accurately, including any deductions for taxes and national insurance contributions.
  • Meet reporting requirements set by HMRC by submitting timely and accurate VAT returns, payroll information, and annual tax returns.
  • Consider using advanced accounting and payroll software designed specifically for dentists to automate calculations, generate detailed reports, and remind you of important deadlines.

Click here to watch our webinar on managing your dental practice accounts.

Outsourcing Bookkeeping and Payroll Tasks to Professionals

Outsourcing accounting and payroll tasks to experts can be a big advantage for dentists. As a dentist, your main focus should be on providing top-quality dental care to your patients. However, administrative tasks like accounting and payroll can be time-consuming and take away valuable hours from your practice.

By outsourcing these tasks to professionals, you can free up your valuable time to concentrate on what you’re good at – serving your patients. Professional accounting and payroll services have the skills and knowledge to handle all the financial aspects of your dental practice efficiently and accurately.

One of the significant benefits of outsourcing is that you can rely on the expertise of professionals who specialize in accounting and payroll for dentists. They understand the unique financial challenges and regulations that dental practices face, ensuring compliance with tax rules and regulations specific to the industry.

Moreover, outsourcing these tasks can help you save money in the long run. Instead of hiring an in-house accountant or payroll expert, which comes with additional costs like salaries, benefits, and training, outsourcing allows you to pay for the services you need on a contractual basis. This can significantly reduce your overhead costs and improve your practice’s financial health.

Additionally, outsourcing accounting and payroll tasks can give you a sense of peace of mind. You can trust that professionals will handle your financial records and transactions accurately and securely, maintaining confidentiality and data protection. This can alleviate the stress and anxiety associated with managing these sensitive aspects of your practice on your own.

In summary, outsourcing accounting and payroll tasks to professionals is a smart move for dentists. It allows you to focus on patient care, ensures compliance with industry-specific regulations, saves money, and provides peace of mind. Consider partnering with a reputable accounting and payroll service provider to improve your practice’s financial management and streamline your operations.

Action points

  • Identify a reputable accounting and payroll service provider that specializes in working with dentists.
  • Review their services and pricing to ensure that they meet your specific needs and budget.
  • Schedule a consultation to discuss your requirements and expectations.
  • Sign a contract that outlines the services to be provided, the fees, and the termination terms.
  • Provide the service provider with the necessary access to your financial records and systems.
  • Review the service provider’s work regularly and provide feedback to ensure that your needs are being met.

Click here to book a free consultation about outsourcing your bookkeeping and accounts.

Tips for Maintaining Accurate and Up-to-Date Financial Records

As a dentist, it’s crucial to maintain accurate and up-to-date financial records for the success of your practice. This not only ensures compliance with legal and regulatory requirements but also provides a clear picture of your practice’s financial health.

Here are some simple tips to help you streamline your accounting and payroll processes and ensure accuracy in your financial records:

  • Use accounting software: Invest in reliable accounting software designed for small businesses or dental practices. These tools can automate many aspects of accounting, such as tracking income and expenses, creating invoices, and generating financial reports. They also provide a secure platform to store and access your financial data.
  • Separate business and personal finances: It’s essential to maintain separate bank accounts and credit cards for your dental practice. Mixing personal and business finances can lead to confusion and make it challenging to accurately track and categorize expenses. Keep all business-related transactions separate to maintain clarity in your financial records.
  • Regularly reconcile accounts: Reconciliation involves comparing your financial records with bank statements to ensure accuracy and identify any discrepancies. This process helps catch errors, detect fraudulent activity, and maintain the integrity of your financial data. Set aside time each month to promptly reconcile your accounts and address any discrepancies.
  • Track expenses diligently: Keep a record of all your operating expenses, including supplies, equipment, rent, utilities, and professional fees. Use categories or expense codes to accurately match and categorize expenses. Maintaining a detailed record of your expenses allows you to identify areas where you may reduce costs and improve profitability.
  • Stay on top of invoicing and payments: Timely and accurate invoicing is crucial for maintaining a steady cash flow. Establish a system to generate and send invoices promptly to your patients or insurance company. Monitor outstanding payments and follow up on any overdue invoices. Consider offering convenient payment options, such as online payments, to streamline the collection process.
  • Seek professional assistance: If managing accounting and financial tasks becomes overwhelming, consider hiring a professional accountant or bookkeeper with experience in the dental industry. They can ensure your records are accurate, assist with tax planning, and provide valuable financial insights to support the growth of your practice.

By implementing these tips, you can simplify your accounting and payroll processes, maintain accurate financial records, and focus more on providing excellent dental care to your patients. Remember, effective financial management is the foundation for a successful and thriving dental practice.

Action points

  • Use accounting software designed for small businesses or dental practices.
  • Separate business and personal finances.
  • Regularly reconcile accounts.
  • Track expenses diligently.
  • Stay on top of invoicing and payments.
  • Seek professional assistance from an accountant or bookkeeper with experience in the dental industry.

Managing finances can be overwhelming, especially for busy professionals like dentists. However, with the simple tips provided in this article, you can simplify your accounting and payroll processes, saving time and ensuring accuracy. By using these strategies, you can concentrate more on providing excellent dental care to your patients while maintaining an efficient financial system.

Click here to read our tax saving tips for dentists.

Our Expert Opinion

“As an accountant who has been working with dentists for over 20 years, we have seen much change in how book-keeping is done in dental practices. Historically, much of this was done by hand or on excel, but in today’s environment the need to be efficient with one’s time and to be on top of the numbers is imperative.

By doing the monthly bookkeeping accurately, as a dentist you will be able to see the financial trends in your practice, this will then help you make better decisions. These decisions could include increasing prices, reducing costs or looking to improve chair utilisation in your practice. This information can form the foundation of growth for your practice, i.e., should you invest, or should you change the structure of your business – the list is endless, but it’s the numbers that help tell the story.

The key is to implement a system of bookkeeping, so you know each month the numbers, and what is occurring in your practice. Without this, it’s like going on an expedition without a map or a compass.

Having access to up-to-date numbers is essential for any successful dental practice, and with the plethora of options available there is really no excuse to not knowing how you are doing.”

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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Dentist and Dental Associate Expenses Guide

In this complete guide, we’ll explain everything you need to know about tax relief as a dentist, including what it is, how it works, and the different types of help available. We’ll also share expert tips and tricks to help you get your expenses back and make the most of your tax relief options.

Understanding the Importance of Tax Relief for Dentists

If you’re a dentist or dental business owner in the UK, it’s crucial to know about tax relief as it can help you save money and improve your tax strategy. Tax relief means getting deductions and allowances from HM Revenue and Customs (HMRC) to lower your overall tax bill.

One big reason tax relief matters for dental business owners is that it allows you to get money back for expenses related to running your business. This includes things like buying equipment, paying for professional services, and even training your staff. By claiming these expenses as tax deductions, you can reduce your taxable income, pay less in taxes and become more profitable.

Tax relief can also create opportunities for investment and growth in your dental practice. For instance, certain expenses like upgrading your dental equipment or expanding your clinic may qualify for tax relief. This means you can get back a portion of the money you spent through tax deductions, which lets you reinvest in your business without shouldering the entire financial burden.

Furthermore, understanding tax relief will help you navigate complex tax rules and ensure you follow HMRC guidelines. By staying informed about the available tax reliefs and allowances designed specifically for dentists and dental business owners, you can maximize your savings while minimizing the risk of potential penalties or audits.

In a nutshell, tax relief is incredibly important for dental entrepreneurs in the UK. It offers many benefits, such as getting money back for various business expenses, supporting growth and investment, and ensuring compliance with tax rules. By learning about the ins and outs of tax relief and seeking professional guidance when needed, you can navigate the tax landscape like a pro and enhance your financial situation as a dental business owner.

Click here for our article and podcast episode on reducing your tax bill as a dentist.

Action points:

  • Learn about the different types of tax relief available to dental business owners in the UK. You can do this by visiting the HMRC website or speaking with a tax advisor.
  • Identify all of the business expenses that you may be eligible to claim tax relief on. This includes things like equipment purchases, professional fees, and staff training.
  • Keep accurate records of all of your business expenses. This will make it easier to file your tax return and claim tax relief on eligible expenses.
  • Consider using a tax advisor to help you with your tax return and claim tax relief. A tax advisor can help you to ensure that you are claiming all of the tax relief that you are entitled to, and that you are following all of the relevant HMRC guidelines.

Click here to learn more about our Tax Planning for Dentists services.

Common Tax Relief Options Available for Dental Professionals in the UK

If you are employed by or run a dental business in the UK, knowing about the various tax relief options available to you is really important for making your finances better. By taking advantage of these helpful opportunities, you can actually lower the amount of taxes you have to pay and increase your profits. In this section, we’ll look at some common tax relief options that dental professionals can use in the UK.

  1. Capital Allowances: Dental practices often need to spend a lot on equipment and tools. The good news is you can claim capital allowances for these assets, which means you can subtract a part of their cost from your taxable profits. This can save you a lot of money in taxes and help you recover some of your initial investment.
  2. Research and Development (R&D) Relief: If your dental practice is involved in innovative research activities or develops new techniques, you might qualify for R&D relief. This relief lets you claim extra deductions or even get a tax credit for eligible R&D expenses. It’s important to keep detailed records of your research projects and consult a tax professional to make sure you follow the specific rules set by HM Revenue and Customs (HMRC).
  3. Business Expenses: It’s crucial to carefully track and record your business expenses because you can deduct them from your taxable income. Common deductible expenses for dental professionals include things like rent, utilities, staff salaries, professional fees, marketing costs, and insurance payments. Remember to keep receipts and proof to support your claims.
  4. Pension Contributions: Making contributions to a pension plan helps you save for retirement and provides tax relief. Dental entrepreneurs can benefit from tax relief on pension contributions up to certain limits, reducing their overall tax liability while securing their financial future.
    Click here to learn more about Pensions and Payroll for Dentists.
  5. Annual Investment Allowance (AIA): The AIA allows dental entrepreneurs to claim a generous deduction for qualifying capital expenditures, such as renovations, building improvements, or equipment purchases. The current AIA limit is £1 million, offering significant opportunities for tax relief on eligible investments.
  6. Employee Benefits: Providing employee benefits like healthcare, dental insurance, and training not only boosts staff morale but also offers tax advantages. Some benefits may be exempt from National Insurance contributions or qualify for tax relief, reducing your overall business taxes.

Remember, tax rules and relief options can be complex and subject to changes in the future, so it’s essential to consult with a qualified tax advisor or accountant who specializes in the dental industry. They can guide you through the intricacies of managing your taxes, ensuring compliance, and maximizing your tax relief opportunities. By staying informed and proactive, you can claim expenses like a pro and enhance the financial performance of your dental business.

Click here to read more about R&D Tax Relief for Dentists.

Action points:

  • Review your business expenses to identify any potential tax deductions. Common deductible expenses for dental professionals include rent, utilities, staff salaries, professional fees, marketing costs, and insurance payments.
  • Keep accurate records of all of your business expenses. This will make it easier to file your tax return and claim tax deductions on eligible expenses.
  • Consider setting up a pension plan and making contributions. Pension contributions can help you save for retirement and provide tax relief.
  • Review your employee benefits to identify any that may be exempt from National Insurance contributions or qualify for tax relief. Providing employee benefits can boost staff morale and reduce your overall business taxes.
  • Consult with a qualified tax advisor or accountant who specializes in the dental industry like Samera. They can help you to claim all of the tax relief that you are entitled to, and to ensure that you are following all of the relevant HMRC guidelines.

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Did You Know?


  1. Dental Practice Expenses: Dentists in the UK can claim tax relief on allowable business expenses. These expenses can include rent, utilities, staff salaries, and other costs associated with running a dental practice.
    Source: HM Revenue & Customs (HMRC)
  1. Capital Allowances: Dentists can claim capital allowances on dental equipment and fixtures, such as chairs, X-ray machines, and dental instruments. These allowances allow for the deduction of the cost of these assets over time.
    Source: HMRC – Capital allowances
  1. Research and Development Tax Credits: Dentists involved in research and development activities can benefit from tax credits to incentivize innovation. This can help reduce the financial burden of investing in new treatments or technologies.
    Source: HMRC – Research and Development (R&D) tax relief
  1. Mileage and Travel Expenses: Dentists can claim tax relief for travel expenses related to their profession, such as attending conferences, visiting patients at different locations, or traveling to training courses.
    Source: HMRC – Travel and subsistence expenses for employees
  1. Student Loan Repayments: Many dentists in the UK may have student loans from their education. The repayment thresholds and rates are linked to income, providing some tax relief by ensuring that repayments are manageable.
    Source: Student Loan Repayment – GOV.UK
  1. National Insurance Contributions (NICs): Dentists may benefit from reduced NICs under the Class 4 NICs scheme, which is based on their income from self-employment.
    Source: HMRC – National Insurance for self-employed people
  1. Pension Contributions: Dentists can receive tax relief on their pension contributions. Contributions to a registered pension scheme are eligible for tax relief, making it an attractive way to save for retirement.
    Source: HMRC – Pension Tax Relief
  1. Childcare Vouchers and Tax-Free Childcare: Dentists with children may benefit from tax relief schemes that help cover the cost of childcare. These include childcare vouchers and tax-free childcare accounts.
    Source: Childcare Choices – GOV.UK

Identifying Eligible Expenses for Tax Relief in Dental Practices

When it comes to running a dental practice in the UK, knowing which expenses qualify for tax relief is crucial for saving money on your taxes. Understanding which costs can be claimed can help you get back a significant portion of your business expenses and reduce your overall tax bill.

To start, it’s important to know that eligible expenses in dental practices can vary depending on the nature of your business and the specific services you provide. However, there are some common expenses that are often eligible for tax relief:

  1. Dental equipment and tools: Any expenses incurred for buying, repairing, or maintaining dental equipment and tools are usually eligible for tax relief. This includes items like dental chairs, X-ray machines, dental drills, and sterilization equipment.
  2. Lab fees: Payments made to dental labs for services like crowns, dentures, and orthodontic devices can be claimed as eligible expenses. Keep track of these payments to ensure accurate deductions.
  3. Staff salaries and training: Salaries and wages paid to your dental team, including hygienists, dental nurses, receptionists, and practice managers, qualify for tax relief. Additionally, the costs associated with training your staff can be claimed as an expense.
  4. Facility rent and utilities: If you operate your dental practice from a rented location, the rent you pay can be claimed as an eligible expense. Other utility bills like electricity, water, and heating can also be included.
  5. Professional fees and insurance: Fees paid to professional bodies, regulatory fees, and insurance premiums designed for your dental practice can be claimed for tax relief. Examples include membership fees to dental associations or malpractice insurance costs.
  6. Marketing and advertising: Expenses related to promoting and advertising your dental practice, such as website development, online advertising, printed materials, and signage, can be claimed as eligible expenses.

We have listed below common key expenses you can claim for in your self assessment tax return as a dentist.

  • Travel for business purposes at 45p/mile, and this includes travel to any courses or visiting accountants etc. We would suggest keeping a diary of business travel through the year so that you don’t have to do all of this at once at the year end. You cannot claim mileage to a regular place of work but can claim for travel to other dental practices where this is irregular
  • Alternatively, you may put the cost of your car through your business, along with the costs of repairs, MOTs, servicing and fuel receipts. However, we would be required to remove the non-business usage proportion of these costs. For example, if you estimate that you have used your vehicle for 20% business use and 80% private use, then we would disallow 80% of these costs. The 20% that has been claimed may still be more than the alternative option of claiming mileage at 45p/mile.
    Click to read about buying a car through a limited company.
  • Any other business travel costs such as trains/taxis etc.
  • Training and Course costs that are to ‘update pre-existing knowledge’, such as annual update courses etc. Course costs that enhance your technical knowledge cannot be claimed as a business expense. You have to tread carefully here as we have seen clients get into trouble with HMRC on this aspect.
  • Subscriptions to the BDA, GDC etc.
  • Professional indemnity insurance
  • Legal advice relating to business matters
  • Cleaning/laundry costs
  • Printing, postage and stationery for business purposes
  • Any dental materials purchased
  • Accountancy costs!
  • Any website or marketing costs you might incur
  • A proportion of your telephone bills relating to business use
  • A proportion of your home bills due to having an office at home to administer your business and put accounts records together (the HMRC flat rate is £4/week but this may be more depending on evidence provided)
  • Loupes or other equipment that you will use for the purpose of your business
  • Cost of study texts that you previously purchased as you will refer to these for the purpose of your business
  • In addition, your business could ‘buy’ from you the cost of your personal laptop and printer that you use to administer the business if you have these

The above list isn’t ‘exhaustive’ so please feel free to ask if there is an expense that you have paid and are unsure whether you can claim. There is no additional fee for asking about these.

Remember, maintaining proper records is essential when claiming tax relief. Keep detailed records of all your business expenses, including receipts, invoices, and bank statements, to support your claims.

To ensure you’re maximizing your tax relief, it’s advisable to consult with a qualified accountant or tax advisor who specializes in dental practices. They can help you navigate the complexities of tax regulations, identify additional eligible expenses, and ensure that your claims are accurate and compliant.

By identifying and claiming eligible expenses for tax relief in your dental practice, you can significantly reduce your tax burden and allocate more resources to providing quality dental care and growing your business.

Click here for our webinar on tax saving strategies for dentists.

Action points: 

  • Review your business expenses to identify any potential tax deductions. The list of common eligible expenses provided in the paragraph is a good starting point, but you may be able to claim other expenses as well.
  • Keep accurate records of all of your business expenses. This will make it easier to file your tax return and claim tax deductions on eligible expenses.
  • Consider working with a qualified accountant or tax advisor who specializes in dental practices. They can help you to identify all of the eligible expenses that you can claim, and to ensure that your claims are accurate and compliant.

Step-by-Step Guide to Claiming Back Expenses

Getting money back for your dental business expenses is a crucial part of managing your finances properly. You can make sure you make the most of your tax relief opportunities and get your expenses back like a pro by following these steps:

  • Step 1: Keep Good Records Start by keeping detailed records of all your business expenses. This means keeping invoices, receipts, and any other documents that show what you’ve spent money on. This will help you see a clear picture of your expenses and make it easier to claim them.
  • Step 2: Learn About Eligible Expenses Find out more about the expenses that can be claimed for tax relief. As a dental business owner, these might include things like equipment purchases, dental supplies, lab fees, professional membership fees, utility bills, insurance payments, and even certain travel expenses. Talk to a tax expert or check HMRC guidelines to make sure you’re claiming the right expenses.
  • Step 3: Keep Personal and Business Expenses Separate To claim expenses accurately, it’s important to keep your personal and business expenses separate. This means having separate bank accounts and credit cards for your business. This way, you can easily identify and track your business expenses, making the claiming process less complicated.
  • Step 4: Categorize Your Expenses Organize your expenses into specific categories, like office supplies, professional fees, or equipment purchases. This organization will make the claiming process smoother and provide a clear breakdown of your expenses for tax purposes.
  • Step 5: Consult a tax professional like Samera Dental Accountants to ensure you’re making the most of your tax relief opportunities and claiming expenses correctly. We can provide expert guidance, review your records, and help identify any additional deductions or relief options tailored to your dental business.
  • Step 6: Submit your claim once you’ve gathered all the necessary documentation and consulted with a tax professional, it’s time to submit your claim. This can usually be done through self-assessment tax forms or other relevant forms required by HMRC. Make sure you submit your claim within the specified deadlines to avoid any penalties or delays.

By following this step-by-step guide, you can navigate the process of claiming expenses for your dental business like an expert. Remember, maintaining proper records, identifying eligible expenses, and seeking professional advice are essential to maximize your tax relief and improve your financial management.

Click here for help on Making Tax Digital for Dentists.

Action points:

  • Keep detailed records of all of your business expenses. This includes things like invoices, receipts, and any other documents that show what you’ve spent money on.
  • Learn about the expenses that can be claimed for tax relief. You can do this by talking to a tax expert or checking HMRC guidelines.
  • Keep your personal and business expenses separate. This means having separate bank accounts and credit cards for your business.
  • Categorize your expenses into specific categories. This will make the claiming process smoother and provide a clear breakdown of your expenses for tax purposes.
  • Consult with a tax professional. They can help you to identify all of the eligible expenses that you can claim, and to ensure that your claims are accurate and compliant.
  • Submit your claim within the specified deadlines.

Tips for Keeping Accurate Records and Receipts for Tax Purposes

When you’re a dental business owner in the UK, it’s vital to keep good records and receipts to get your expenses back and make the most of tax relief. This not only helps you follow tax rules but also allows you to take full advantage of deductions and credits that you’re eligible for.

First, set up a system to organize and store your records. You can do this digitally or with physical files, depending on your preference. You can use accounting software or small business apps to make the process easier and reduce the risk of losing important records.

Regularly practice the habit of keeping all receipts related to business expenses. This includes receipts for things like equipment purchases, office supplies, professional memberships, continuing education courses, and any other expenses directly related to running your dental practice. Even seemingly small expenses can add up and lead to significant tax savings.

In addition to receipts, maintain clear and detailed records of your income and expenses. You can do this by using bank statements, invoices, and financial reports. Keep track of any mileage or travel expenses incurred for business purposes, as these can also be tax-deductible.

It’s important to keep personal and business expenses separate to avoid confusion or potential issues during tax time. Having a dedicated business bank account and credit card can help streamline this process and provide a clear distinction between personal and professional finances.

Consider consulting with a tax professional or accountant who specializes in dental businesses. They can offer guidance on tax regulations, ensure accurate record-keeping, and help you identify additional deductions or credits that may apply to your specific situation.

By maintaining accurate records and receipts, you’ll not only simplify the tax filing process but also maximize your tax relief as a dental business owner. Remember, every eligible expense counts, so stay organized and claim your expenses like a pro.

Action points:

  • Set up a system for organizing and storing your records. This could be a digital system, such as using accounting software or small business apps, or a physical system, such as using folders and filing cabinets.
  • Regularly practice the habit of keeping all receipts related to business expenses. This includes receipts for things like equipment purchases, office supplies, professional memberships, continuing education courses, and any other expenses directly related to running your dental practice.
  • Maintain clear and detailed records of your income and expenses. You can do this by using bank statements, invoices, and financial reports. Keep track of any mileage or travel expenses incurred for business purposes, as these can also be tax-deductible.
  • Keep personal and business expenses separate. This means having a dedicated business bank account and credit card.
  • Consult with a tax professional or accountant who specializes in dental businesses. They can offer guidance on tax regulations, ensure accurate record-keeping, and help you identify additional deductions or credits that may apply to your specific situation.

Maximizing Tax Relief Through Capital Allowances and Depreciation

Increasing tax relief through capital allowances and depreciation is an important strategy for dental business owners in the UK. By understanding and using these methods, you can effectively lower your tax bill and keep more of your hard-earned money in your pocket.

Capital allowances refer to tax deductions that can be claimed on the cost of certain assets used in your dental practice. These assets include equipment, machinery, furniture, and even certain building improvements. Instead of deducting the full cost of these assets in the year of purchase, capital allowances allow you to claim a portion of the cost over several years, providing a significant tax benefit.

To maximize your capital allowances, it’s crucial to maintain detailed records of your purchases and their associated costs. This includes invoices, receipts, and any supporting documents that prove the expense is eligible for tax relief. By keeping accurate records, you can ensure that you are claiming the maximum allowable deductions and avoiding any potential issues with HM Revenue and Customs.

Depreciation, on the other hand, refers to the gradual decrease in the value of assets over time. While depreciation is not directly deductible for tax purposes in the UK, it is still an important consideration when assessing the value of your assets and calculating their capital allowances. Understanding the depreciation rates applicable to different assets can help you determine the most advantageous timing for claiming tax relief.

Tax regulations and rules regarding capital allowances and depreciation can be complex, and they are subject to future changes. Therefore, it is highly recommended to consult with a qualified accountant or tax advisor who specializes in dental business taxation. They can provide expert guidance tailored to your specific circumstances, ensuring that you are maximizing your tax relief while remaining compliant with the relevant regulations.

By effectively using capital allowances and depreciation, dental entrepreneurs in the UK can significantly reduce their tax liabilities and allocate more resources to growing their practices. Take the time to educate yourself about these strategies, seek professional advice, and confidently claim your expenses like a pro.

Action point:

  • Learn about the different types of capital allowances that are available to dental businesses in the UK. You can do this by visiting the HMRC website or speaking with a tax advisor.
  • Keep accurate records of all of your business assets and their associated costs. This includes invoices, receipts, and any supporting documents that prove the asset is eligible for tax relief.
  • Understand the depreciation rates applicable to your business assets. This will help you determine the most advantageous timing for claiming tax relief.
  • Consult with a qualified accountant or tax advisor who specializes in dental business taxation. They can provide expert guidance on how to maximize your capital allowances and depreciation deductions while remaining compliant with the relevant regulations.

Exploring Potential Tax Relief Schemes Specific to the Dental Industry

When it comes to getting tax relief for your dental business in the UK, it’s important to look into special programs designed for dental professionals. The government has introduced various tax relief opportunities that can greatly benefit dentists and help reduce their tax bills.

One such program is the Annual Investment Allowance (AIA). With this program, dental business owners can claim tax relief on qualifying capital expenses like equipment purchases, renovations, and practice improvements. The AIA lets you subtract the full cost of these investments from your taxable profits, up to a certain limit, which can boost your cash flow significantly.

Dental professionals can also take advantage of the Research and Development (R&D) tax relief scheme. Many people mistakenly believe that R&D relief is only for scientific or high-tech industries. However, R&D activities in the dental field, such as developing innovative dental treatments, improving dental materials, or implementing advanced imaging technologies, can also qualify for this relief. By claiming R&D tax relief, you can get tax credits or deductions for the expenses incurred during these research and development activities, further reducing your tax rate.

Another tax relief scheme that dental business owners should explore is Capital Allowances. This scheme allows you to claim tax relief on the purchase or renovation of buildings, as well as fixtures and fittings within the premises. Dental practices often incur significant expenses on equipment, furniture, and dental chairs, which are typically eligible for capital allowances. By properly assessing and categorizing these assets, you can claim tax relief on their cost over time, leading to substantial savings for your business.

Finally, the Enhanced Capital Allowances (ECAs) scheme should not be overlooked. ECAs specifically apply to energy-efficient investments, such as energy-saving lighting systems, air conditioning systems, and renewable energy installations. By investing in eco-friendly technologies, dental practices can not only reduce their environmental impact but also benefit from accelerated tax relief through ECAs.

In summary, by exploring and taking advantage of tax relief schemes tailored to the dental industry, you can significantly reduce your tax liabilities and improve your financial position. Be sure to consult with a qualified tax expert or accountant who specializes in dental practices to ensure you are maximizing your tax relief opportunities and staying compliant with the latest regulations.

Action point:

  • Learn about the different tax relief programs available to dental business owners in the UK. This includes the Annual Investment Allowance (AIA), Research and Development (R&D) tax relief scheme, Capital Allowances, and Enhanced Capital Allowances (ECAs).
  • Assess your business expenses to identify any that may qualify for tax relief under these schemes.
  • Keep accurate records of all of your business expenses and assets. This will help you to claim the maximum allowable deductions and avoid any potential issues with HM Revenue and Customs.
  • Consult with a qualified tax expert or accountant who specializes in dental practices. They can provide expert guidance on how to maximize your tax relief opportunities while remaining compliant with the relevant regulations.

Overcoming Common Challenges and Pitfalls when Claiming Tax Relief

Claiming tax relief can be a complicated process, especially for dental business owners in the UK. However, by being aware of common challenges and pitfalls, you can navigate the process with ease and maximize your tax savings.

One common challenge is maintaining accurate and organized records of your business expenses. To ensure you can claim tax relief on eligible expenses, it’s essential to keep precise records, including receipts, invoices, and supporting documents. Implementing a robust accounting system and regularly reviewing and categorizing your expenses can help you stay on top of your records.

Another challenge is understanding the specific tax rules and regulations associated with dental businesses. Tax rules can vary depending on the nature of your business, such as whether you are a sole proprietor, a partnership, or a limited company. Consulting with a qualified accountant who specializes in dental businesses can provide you with expert advice tailored to your specific situation and help you navigate any complexities.

It’s also important to be aware of potential pitfalls when claiming tax relief. One common pitfall is incorrectly categorizing expenses or claiming ineligible expenses. This can result in penalties or even an audit from HM Revenue and Customs. Taking the time to understand the specific tax rules and seeking professional guidance can help you avoid such pitfalls and ensure you are claiming tax relief correctly.

Furthermore, staying up to date with changes in tax regulations and rules is crucial. Tax regulations are subject to regular updates, and staying informed about any changes can help you take advantage of new opportunities for tax relief and avoid potential pitfalls. Subscribing to newsletters or attending relevant courses or webinars can provide you with the latest information and insights.

In conclusion, overcoming common challenges and pitfalls while claiming tax relief requires diligence, organization, and seeking professional advice. By keeping accurate records, understanding the specific tax rules for dental businesses, avoiding common pitfalls, and staying up to date with changes in tax regulations, you can claim tax relief like a pro and maximize your savings as a dental business owner in the UK.

Challenges and how to overcome them:

  • Challenge: Maintaining accurate and organized records of business expenses
    Action: Implement a robust accounting system and regularly review and categorize expenses.
  • Challenge: Understanding the specific tax rules and regulations associated with dental businesses
    Action: Consult with a qualified accountant who specializes in dental businesses.
  • Challenge: Avoiding potential pitfalls when claiming tax relief
    Action: Take the time to understand the specific tax rules and seek professional guidance.
  • Challenge: Staying up to date with changes in tax regulations and rules
    Action: Subscribe to newsletters or attend relevant courses or webinars.

As a dentist, dealing with taxes can be overwhelming, but with the tips and strategies outlined here, you can claim your expenses like a pro. By taking advantage of tax relief opportunities, you can increase your savings and ensure that you are keeping more of your hard-earned money.

Be sure to consult with a tax professional like Samera to ensure you are following all the rules and making the most of available deductions. With this guide, you’ll be well-equipped to navigate the tax landscape and enhance your financial success as a dental entrepreneur in the UK.

Our Expert Opinion

“There are so many business expenses that can be claimed for when trading as a dentist. But the key is to identify what is business and what is personal to ensure you don’t fall foul of HMRC’s requirements. Use this guide as a starting point and then seek expert help to make the right claims.”

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

How to save money, tax and time in your dental practice

In this webinar with the BDA, Arun talks about the different ways you can organise your finances to save time, money and tax for your dental business.

In this talk, given at the 2022 BDIA Dental Showcase, Arun talks about how to save money, tax and time in your dental practice.

Click here to read our articles Samera.

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

How to Manage Your Dental Practice Accounts

In this webinar, we discuss how we can help you manage your financial and tax affairs if you are a practice owner. We cover how to organise your accountancy and tax affairs whilst minimising your tax liability, as well as Making Tax Digital.

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

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Tax Saving Strategies for Dentists

In this webinar we will discuss tax saving strategies for your practice, simple and complex tax planning opportunities.

Tax Saving Strategies Webinar

Tax Saving Tips For Dentists

The last few tax years saw many new changes in tax legislation. Planning ahead is more important than ever to ensure you work within the rules to not miss out on a tax saving opportunity. Tax for dentists is a complex area that requires specialist tax knowledge about dentistry. Our team has this specialist tax knowledge.

Action Point

Optimize tax benefits by strategically claiming capital allowances. If claiming full capital allowances would result in losing personal allowances due to high profits, elect to claim a reduced amount. This preserves personal allowances and carries forward unclaimed allowances to future years.

Click here to read our article about financial tips for dentists.

Selective Capital Allowances Planning

Even though you may have spent money on capital items in a tax year, there is no requirement to claim capital allowances at all.

This matters when your circumstances in a tax year mean that if you claimed all of the capital allowances you are eligible for, you would lose your personal allowance.

E.g. Dentist ABC has profits of £100k and losses of £50k brought forward which can be used to reduce the taxable profits.

They also spent £50k on capital items in the year, upon which capital allowances can be claimed. However, an election can be made to reduce the claim to £38.5k instead, leaving £11.5k as the taxable profits. (I.e. £100k -£50k -£38.5k = £11.5k).

By restricting the amount of capital allowances claimed you can still make use of your personal allowances (Which is £11,500 in 2017/18) and carry forward the unclaimed capital allowances into the next year instead of losing them.

Action Point

Strategically plan capital allowances to optimize personal allowance benefits. Consider electing to claim less than the total available to carry forward unclaimed allowances, maintaining personal allowance eligibility.

Click here to read our blog on 10 tax saving tips for Vets.

Dividend Allowance

With the new rates of dividends that came in on the 6th April 2021, dividend income is now taxed at 7.5%, 32.5% and 38.1%, depending on whether your total income (including the dividend itself) puts you into the basic rate, higher rate or top rate bracket.

Along with the new rates the Chancellor has now given every UK taxpayer a new £2,000 tax-free “dividend allowance” which means the first £2,000 of dividend income is tax-free. To minimise your tax position, it is possible to allocate some shares to a spouse who doesn’t have dividend income to make sure this dividend allowance isn’t lost. This must be done carefully and within the accepted boundaries to be acceptable to HMRC. 

Action Point

Maximize tax efficiency by using the £2,000 tax-free dividend allowance. Allocate shares to a spouse with no dividend income to fully utilize this allowance. Ensure compliance with HMRC guidelines for share allocation.

Contact us to find out more

Gift Aid

Remember to record all the charity donations you’ve made. These reduce your taxable income.

If you’re a higher rate taxpayer, you can personally claim back tax.

Example: You donate £100 to charity, they claim Gift Aid to make your donation £125. You pay 40% tax so you can personally claim back £25.00 (£125 x 20%).

Care needs to be taken here though. It can sometimes cost you tax. If you’re close to the personal allowance, this could be the case. Speak to a dental accountant to check what tax you are due back!

Action Point

Maximize tax benefits by recording all charitable donations for tax reduction. Higher-rate taxpayers can reclaim tax on Gift Aid donations. Consult a dental accountant to optimize tax returns and avoid potential costs.

Pension Contributions

When paying into your pension, you receive tax relief on any contributions that you make. This is at the highest rate of income tax that you pay, provided that the total gross pension contributions paid into your pension scheme, by you and anyone else don’t exceed the lower of your annual earnings and the annual allowance.

This could mean that, if you’re a higher rate taxpayer, £10,000 worth of contributions could get you £4,000 tax relief. Meaning you’re receiving at least a £10,000 benefit for only £6,000.

Action Points

Maximize tax relief on pension contributions, especially for higher rate taxpayers, ensuring contributions do not exceed the lower of annual earnings or the annual allowance for optimum benefits.

Limited Company Research & Development

Are you doing something that has never been done before, in advance of current technologies and sciences? This could be something as simple as a website or an app.

Millions worth of tax relief is missed by SME’s, due to people not knowing about this extremely generous tax relief for qualifying expenditure.

For each £10,000 spent on R&D, you could receive £22,500 worth of corporation tax relief. That means that the expense only really cost you just over half of what you spent at £5,500.

The tax rules surrounding this are very complex and therefore require a professional dental accountant to ensure the expenses qualify.

Action Point

Leverage R&D tax relief for innovative projects, potentially receiving £22,500 in corporation tax relief for every £10,000 spent, effectively reducing the cost to £5,500. Seek professional advice to ensure eligibility and maximize benefits.

Click here to find out more about our R&D tax relief services.

Cash In On Self-Employment Profits Taxed Twice

Again, another relief people know little about.

If your self-employment year-end differs from 5th April, it’s very likely you’ve paid tax twice on your overlap profits and therefore with a little planning, you can get this back!

Many sole traders and businesses have a tax relief just waiting to be used and can ‘cash it in’ at any time they choose.

Utilise Your Tax-Free Personal Savings Allowance

Do you have a credit balance Director’s loan account (amount owing to you from your Ltd company)?

If so, you could be missing out on utilising your tax-free personal savings allowance.

Invest Wisely

There are huge tax breaks for investments in EIS / SEIS and VCT’s. To say they are generous is a huge understatement.

For example, you could invest £10,000 into an SEIS and get £5,000 immediate tax relief. What’s more, due to loss relief, even if your investment folds, your actual loss will only be £2,750. You can even carry back to the previous year.

Contact us to find out more

In addition, every individual has a £20,000 ISA allowance available each year, which is income and capital gains tax free, so if you are not utilising this tax saving wrapper, you should really consider this.

Again, the tax legislation surrounding these different investment schemes are complex and the level of relief depends on the individual person so you should ensure you obtain independent tax advice before proceeding.

Claim All The Allowances You Are Eligible For

Whether it is claiming for use of home as an office, or laundry allowance every little helps and working with a Dental Accountant means they will be able to maximise the items you can claim for.

Tax for dentists is a complicated subject which requires knowledge and expertise.

The above is just a taste of some of the top tips, however, we strongly recommend you seek professional advice on any of the subjects detailed above.

Action Point

  • Review overlap profits for potential tax relief if your self-employment year-end differs from April 5th.
  • Utilize your tax-free personal savings allowance, especially if you have a credit balance in your Director’s loan account.
  • Consider investing in EIS/SEIS and VCTs for significant tax breaks and loss relief.
  • Maximize your £20,000 ISA allowance annually for income and capital gains tax benefits.
  • Claim all eligible allowances, including use of home as an office or laundry expenses, to reduce taxable income.
  • Consult with a professional dental accountant to navigate complex tax rules and maximize your tax-saving opportunities.

Click here to read our articles Samera.

Our Expert Opinion

“I have had fewer hot meals than the amount of times dentists have asked me to save tax. The truth is the options available to save tax legitimately are limited. Long gone are the days of some questionable tax planning, however, there are reliefs and planning opportunities that are well with the law. Don’t get swayed by someone they can save you tax, instead focus on the basics right to save tax, this means accounting for everything, getting organised and ensuring you have the right tax structures set up for you.”

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Money Saving Tips for Dentists

Running a dental practice is not easy, and it can be expensive. You have to pay for things like equipment, supplies, staff, and rent, which can eat into your profits. But there are ways to save money without compromising patient care. In this article, we will share some tips to help you save money in your dental practice. You can negotiate with suppliers, reduce waste, and make your operations more efficient to cut costs.

When it comes to saving money, dentists walk a tightrope. This is because any minuscule changes you make to your dental practice can have the opposite effect and could hurt your business instead of helping.

With a dental business it is very hard to cut overheads, such as property costs, employee salaries and administrative services. These are things you need to spend on to maintain your dental practice and keep patients coming through the door. That’s what makes saving money on these things very tricky.

As a dentist, you are always committed to your patient’s health and wellbeing. However, as a business owner, you need to earn the necessary profits to sustain and grow your practice. Samera helps dentists all over the UK find the right balance in the inflationary environment we now live in.

In a time where inflation and interest rates are rising, much like many other expenses, shopping around for better deals on everything you need in your practice is a necessity.

However, Samera cuts this need entirely by automatically finding you the best value options from the leading brands in the industry through the Samera Dental Buying Group. Get in touch with Team Samera to see how we can help you save money today, but in the meantime have a read of our tips below.

Click here to read more about how to cut expenses in a small business.

By following these tips, you can run a successful practice while keeping more money for yourself. Whether you have a small practice or a large dental group, keep reading to learn how to save money and improve your profits.

Top Money-Saving Tips for Your Dental Practice – Webinar

First of all, watch this free webinar in which Arun discusses ways in which you can save money in your dental practice, from utility bills to dental equipment and consumables.

Introduction: The importance of saving money in your dental practice

Running a successful dental practice means taking good care of your patients and managing your money well. We know that providing excellent dental care requires investing in equipment, supplies, and staff. But it’s also important to find ways to save money without compromising the quality of service.

By using smart strategies to save money, you can make your practice more profitable, streamline operations, and ensure long-term success. In this blog post, we will give you valuable tips to help you save money in your dental practice. We’ll talk about optimising your supply chain and using cost-effective technology, among other things.

Saving money in your dental practice not only helps your finances but also allows you to invest in things like training your team or improving your practice’s infrastructure. So, let’s get started and learn the best money-saving tips to make your dental practice thrive while keeping your finances in order.

Action Point

Optimize your dental practice’s finances by negotiating for better supply prices, embracing cost-effective technology, and streamlining operations to boost profitability without compromising care quality.

Evaluate your expenses: Identify areas where you can cut costs

To run a successful dental practice, it’s important to manage your finances wisely. One way to increase your profits is by looking at your expenses and finding areas where you can spend less money. This will help you use your resources more effectively.

First, go through your budget and examine each expense. Look at things like supplies, equipment, utilities, and employee salaries. See if there are any costs that seem too high or unnecessary. For example, you might discover that you’re spending too much on certain supplies or paying for services you don’t really need.

Next, think about alternatives or ways to save money for each expense. Can you negotiate better deals with your suppliers? Are there cheaper options for equipment maintenance or repairs? Can you find ways to use less energy and lower your utility bills? These are all things you can consider.

Another area to focus on is your staff’s schedule. By making sure your employees work efficiently and optimising their hours, you can potentially reduce labour costs without compromising patient care. Think about implementing flexible schedules, training your staff to do different tasks, or outsourcing some administrative work.

You can also use technology to make your operations more efficient and save money. Digital record-keeping, online appointment scheduling, and automated reminders can help you cut administrative costs and work more efficiently.

Remember, reducing costs doesn’t mean you have to compromise on quality or the experience you provide to your patients. It’s about finding smarter ways to use your resources without sacrificing the level of care you give. By regularly reviewing your expenses and making strategic changes, you can save money and improve the financial health of your dental practice.

Action Point

To boost your dental practice’s financial health, thoroughly review expenses and identify savings opportunities without compromising care quality. Consider negotiating better supply deals, optimizing staff schedules, and utilizing technology for efficiency. Regular financial evaluations and strategic adjustments can lead to significant savings and enhance profitability.

Negotiate with suppliers: Tips for getting better deals on dental supplies

Negotiating with suppliers is important for your dental practice’s finances. Getting better deals on dental supplies can lower your costs and increase profits. Here are some tips to help you negotiate and get the best deals:

Research prices: Before negotiating, know the market prices for the supplies you need. Compare different suppliers’ prices, quality, and reputation. This knowledge will help you during negotiations.

Build relationships: Having good relationships with suppliers can help you get better deals. Communicate with them regularly, give feedback, and show you’re a loyal customer. Suppliers are more likely to negotiate and offer better prices when they value your partnership.

Bundle purchases: Combine your orders and buy multiple supplies from the same supplier. This gives you more negotiating power. With larger orders, you can ask for bulk discounts, free shipping, or extended payment terms. Suppliers often appreciate long-term, high-volume customers and may give you better deals.

Be ready to walk away: Negotiations involve give-and-take. If the terms don’t meet your goals, be prepared to walk away. This shows you’re serious about getting the best value. It may make suppliers reconsider their offers.

Consider other suppliers: Don’t limit yourself to one supplier. Research and contact multiple suppliers to find better deals. Competition among suppliers works in your favour, as they may offer lower prices or additional benefits to win your business.

Remember, negotiating isn’t about demanding lower prices aggressively. It’s about finding solutions that benefit both parties. By following these tips, you can improve your negotiation skills and save money on dental supplies for your practice.

Action Point

To boost your dental practice’s financial health, thoroughly review expenses and identify savings opportunities without compromising care quality. Consider negotiating better supply deals, optimizing staff schedules, and utilizing technology for efficiency. Regular financial evaluations and strategic adjustments can lead to significant savings and enhance profitability.

Consider group purchasing organisations (GPOs): Exploring the benefits and savings of joining a buying group

When running a dental practice, saving money is important. One way to do that is by joining a group purchasing organisation (GPO).

A GPO negotiates discounts with suppliers for its members, like dental practices. By pooling together the buying power of its members, a GPO can secure big discounts on dental supplies and equipment.

Joining a GPO can save you a lot of money. As a member, you get access to the discounted rates they negotiated, which helps you stretch your budget. This means you can spend more on other important things for your practice.

GPOs also offer a wide range of products from different suppliers, so you have more options at competitive prices. This is especially helpful when buying expensive equipment or specialised materials because the savings from the GPO can be significant.

Another benefit of joining a GPO is that it saves you time negotiating with suppliers. Instead of contacting suppliers one by one, the GPO handles the negotiations for you. This frees up your time to focus on providing good care to your patients.

Not all GPOs are the same, so it’s important to research and compare your options. Look at things like the range of suppliers they work with, the size of their network, and their reputation in the dental industry.

Joining a GPO can be a smart move for your dental practice. It gives you access to cost savings, a variety of products, and makes purchasing easier. By considering the benefits and savings of joining a GPO, you can make informed decisions that will help your dental practice financially.

Action Point

For better deals on dental supplies, research prices, build relationships with suppliers, bundle purchases, be willing to walk away, and consider multiple suppliers.

Join the Samera Alliance Buying Group

The Samera Alliance is our growing network of dentists, practices and leading industry suppliers, designed to help you save money, grow your profits and build a better dental business.

Join today for free to be a part of our dental buying group, which gives you access to exclusive discounts and offers on the consumables, equipment and products you need to run a successful dental business.

You’ll also get better rates and terms for a wide range of services like HR, IT, utilities, insurance, legal services and much more!

Embrace technology: How implementing digital solutions can save you money in the long run

Using technology can be a game-changer for your dental practice. It helps make things easier, saves time, and can even save you money in the long run.

One area where technology can help is in managing your patients. With a cloud-based practice management software, you can store patient records, appointments, and billing information digitally. This means you don’t have to print as much paperwork or spend money on storage. It also saves you time because you don’t have to manually enter data. Plus, these systems can send automated reminders and help with scheduling, which reduces missed appointments and cancellations.

Another way technology saves money is with digital imaging equipment. Traditional X-ray films are expensive and take up space. But digital X-ray systems give you instant, high-quality images without the need for film. You don’t have to buy film or deal with developing and disposing of it. Although the initial cost of digital equipment may seem high, you’ll save money in the long run by not having to buy film or maintain it.

Using telehealth solutions can also help you save money. You can do remote consultations and give advice through video calls or telemedicine software. This means patients don’t have to travel, which saves them money. It also reduces your overhead costs.

Technology can also help with marketing. Having a good website and active social media profiles can attract new patients and strengthen relationships with existing ones. You can also do digital marketing campaigns like targeted emails or online ads to reach your desired audience without spending a lot on advertising.

In conclusion, technology has many benefits for your dental practice, including saving money. By using digital solutions for patient management, investing in digital imaging, embracing telehealth, and using digital marketing, you can improve your practice, take better care of your patients, and increase your profits.

Action Point

Implement digital solutions like practice management software, digital imaging, telehealth, and digital marketing to streamline operations, reduce costs, and improve patient care, ultimately saving money for your dental practice.

Train your staff: Investing in education and training to improve efficiency and reduce expenses

Investing in education and training for your dental staff is important for improving your practice’s efficiency and reducing expenses. When your staff is well-trained, they perform their tasks better and create a positive experience for patients. This can lead to more patients staying with your practice and referring others.

Provide opportunities for ongoing education and training to expand your staff’s knowledge and skills. They can attend conferences, participate in webinars, or take specialised courses. When they stay updated on industry trends, techniques, and technologies, they can provide the best care to your patients.

Training shouldn’t only focus on clinical skills but also administrative tasks. Efficient scheduling, billing, and record-keeping processes can make your practice more productive and profitable. Training your staff on practice management systems or hiring experts to teach them can streamline these processes, reduce mistakes, and save time and resources.

A well-trained team can handle emergencies and unexpected situations effectively, reducing the need for expensive external help. By giving your staff the right knowledge and skills, they can confidently and efficiently handle different scenarios, saving your practice time and money.

Investing in your staff’s professional development can also boost their morale and job satisfaction. This leads to lower turnover rates, as happy employees tend to stay longer. Keeping experienced staff members saves you recruitment and training costs and ensures consistent care for your patients.

Remember, education and training should be ongoing. Encourage your staff to continuously seek learning opportunities and ways to improve. By investing in their growth, you are investing in the success and financial stability of your dental practice.

Action Point

Invest in your dental staff’s education and training to improve practice efficiency and reduce expenses. This not only enhances patient care but also boosts staff morale, leading to lower turnover and recruitment costs, ultimately saving money for the practice.

Click here to read more about building a dental team.

Maintain your equipment: Tips for proper maintenance and avoiding costly repairs or replacements

Taking care of your dental equipment is important for your practice’s smooth operation and saving money. Neglecting equipment maintenance can lead to expensive repairs or replacements. Here are some simple tips to keep your dental equipment in good condition:

Follow the manufacturer’s guidelines: Read and understand the maintenance instructions provided by the manufacturer for each piece of equipment. Clean, lubricate, and calibrate them regularly as recommended.

Create a maintenance schedule: Make a schedule to keep track of when each equipment needs attention. This can include daily, weekly, monthly, or yearly tasks depending on the equipment. Following a schedule helps prevent issues and catch problems early.

Train your staff: Make sure your staff knows how to use and maintain the equipment correctly. Teach them to recognize warning signs of equipment problems. Encourage them to report any issues promptly.

Use quality tools and materials: Invest in good-quality tools and materials for your practice. Cheaper alternatives may save money at first, but they wear out quickly and need frequent replacements. Durable equipment lasts longer and saves money in the long run.

Regular inspections: Check your equipment regularly for signs of wear, tear, or possible problems. Early detection helps prevent major repairs.

Consider professional servicing: Along with regular maintenance, schedule professional servicing for your equipment. Professionals can inspect, clean, and optimise the performance of your dental equipment.

By following these tips and prioritising equipment maintenance, you can avoid expensive repairs or replacements. Your dental practice will operate smoothly and efficiently, saving you money. Remember, prevention is better than cure when it comes to your dental equipment!

Action Point

Maintain your dental equipment regularly to prevent costly repairs or replacements, ensuring your practice operates efficiently. Follow the manufacturer’s guidelines, create a maintenance schedule, train staff, use quality materials, perform regular inspections, and consider professional servicing. Prioritizing equipment maintenance saves money and keeps your practice running smoothly.

Explore financing options: Understanding dental practice loans and other financial resources to help manage expenses

As a dental practice owner, it’s important to manage your expenses well to succeed and make a profit. One way to do this is by exploring different financing options available to dental practitioners.

Dental practice loans are designed specifically for dental professionals like you. They provide funds to cover expenses such as buying equipment, renovating your office, upgrading technology, or even acquiring a practice. With a dental practice loan, you can manage your cash flow and invest in the growth of your practice.

When considering a dental practice loan, research different lenders and compare their terms and interest rates. Look for lenders who specialise in dental practice financing, as they understand the industry better and can offer solutions that suit your needs.

Another option is equipment leasing. Leasing dental equipment helps you save your working capital while still getting access to the latest technology and equipment you need for your practice. Leasing spreads out the cost over time, making it more affordable and manageable for your cash flow.

Besides these financing options, look into other sources of financial assistance. Some dental associations and organisations offer grants or scholarships for dental professionals. These can help with expenses or fund continuing education. Also, there may be government programs or incentives to support dental practices, so stay informed about any financial resources that can benefit your practice.

By exploring these financing options, you can manage your expenses and ensure the financial stability of your dental practice. Carefully evaluate each option, consider your long-term goals, and consult with financial professionals who specialise in dental practice management to make informed decisions for your business’s financial health.

Action Points

Explore financing options for your dental practice, including specialized loans and equipment leasing, to manage expenses and invest in growth. Research lenders, compare terms, and consider additional financial resources like grants or government programs. Consult with financial professionals to make informed decisions for your practice’s financial health.

Please click here to read our guide to financing a dental practice.

Review your insurance policies: Ensuring you have the right coverage at the best rates

It’s important to review your insurance policies to manage the financial health of your dental practice. Dental practices have unique risks and liabilities that require special coverage, so it’s crucial to make sure you have the right policies in place to protect your practice and patients.

Start by looking at your current insurance coverage. Check your general liability insurance, malpractice insurance, property insurance, and workers’ compensation insurance, among others. Understand what risks are covered and what may be missing by reviewing the terms, limits, and exclusions of each policy.

Get quotes from different insurance providers or brokers for the same coverage. Comparing rates from multiple insurers helps you find the best rates without compromising on the coverage you need. Ask about any discounts or customised packages available for dental practices.

As you review your insurance policies, consider any changes in your practice’s operations or services. If you’ve added new procedures, expanded your office space, or hired more staff, you may need to adjust your insurance coverage. Keeping your policies up to date ensures you have enough protection.

Consider working with an insurance professional who specialises in dental practices. They can provide valuable advice on the specific risks and coverage options for your industry. Their expertise helps you understand complex policy terms and make sure you have adequate protection at the best rates.

Remember, insurance is an investment in the long-term financial stability of your dental practice. Regularly reviewing your policies and getting the right coverage at the best rates helps protect your practice from unexpected events and can save you a lot of money.

Action Point

Review your dental practice’s insurance policies regularly to ensure you have comprehensive coverage tailored to your unique needs. Compare quotes, adjust policies for any changes in operations, and consult with specialists. Proper insurance safeguards your practice’s financial health.

House brands vs name brands

House brands are a great alternative for some more expensive name brand products. If you do your research correctly, most types of dental consumables have the same, if not very similar, ingredients and often most are manufactured by the same companies. The biggest difference is the price point. However, this is not the case with all house brands, the cheapest brand is not always the least expensive.

Branded PriceOwn BrandPrice
4% 1:100,000 2.2ML LATEX-FREE£26.75BARTINEST 1:100,000 2.2ML ANAESTHETIC£22.96
ALCOHOL FREE JUMBO WIPES REFILL£8.50UNODENT ALCOHOL-FREE WIPES£2.86
BRUSH REFILL REGULAR ASSORTED£30.24MICRO APPLICATOR BRUSH REGULAR – MIXED£4.40
UNIVERSAL SPRAY (NO NOZZLE)£23.00UNOLUBE UNIVERSAL SPRAY£4.27
Aspirator Cleaner £28.99AUTORINSE DAILY ASPIRATOR CLEANER£12.64

Sometimes the price of some things you need matches the hefty price attached to it. Buying cheaper branded items when it comes to non-critical items such as disposable barriers and cotton rolls is a good way to save money. Those products will make very little difference to you or your patients. However, when it comes to anything that is a bit more valuable and you are debating it over, it’s worth weighing up the pros and cons. Does the price justify the usage of the product? When it comes to anything that will aid you in diagnosing, treating or restoring, save yourself the trouble and opt for a more reliable brand to buy from.

If you join a dental buying group you can still purchase these more expensive items at an exclusive, more competitive price – just for being part of the group!

Loyalty rewards: Get rewarded for your business!

Many companies offer rewards or loyalty programs, so pay attention to what is out there for you to benefit from. Company representatives often know all the tricks, so sometimes it’s worth talking to them so they can teach you how to order more effectively. Sometimes you can take advantage of special programmes and free products or loyalty awards that many distributors offer.

Keep in mind that none of this will happen automatically, you will need to take the time to find how to get the most out of what is available.

Action Point

Maximize savings by utilizing loyalty rewards and programs offered by suppliers. Engage with company representatives to learn effective ordering strategies and take advantage of special offers, free products, or loyalty awards. A proactive effort is required to benefit from these opportunities.

Understanding the dangers of ‘false economy’

The truth is, the steps you take in starting to save money can actually become an expensive venture. A great example of this is that perhaps it is a lot cheaper for you to have an automatic answering machine for your calls, rather than employing a full-time receptionist. However, if you consider patient experience, your reception is often the first point of contact with your business.

In other words, a good receptionist with excellent customer service skills is worth every penny you invest in them, even though they may not be the cheapest option.

This is very similar to dental equipment. While buying cheaper consumables that have similar ingredients and manufacturers may be worth buying, looking at the cheapest price of dental equipment may not tell the same story.

We hope our blog post about saving money in your dental practice was useful to you. Running a dental practice can be costly, but there are ways to save money without sacrificing care quality. By following the tips we mentioned, like talking to suppliers, managing your inventory well, and getting the most from your insurance reimbursements, you can save a lot of money and make your practice more profitable. Remember, every pound you save can be used to improve your practice or provide better care to your patients.

Action Point

Recognize the importance of value over cost. Opting for cheaper alternatives, like an automated answering service, may save money initially but can negatively impact patient experience. Similarly, while inexpensive dental consumables might seem appealing, investing in quality equipment ensures better service and long-term savings. Prioritize investments that enhance patient satisfaction and practice efficiency.

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.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Maximising your Dental Practice’s EBITDA

In this webinar Arun discusses how to maximise your dental practice value through growing your practice EBITDA before you sell.

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

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Buying a Car Through Your Limited Company: 4 Things You Need to Know

When your company buys a piece of equipment or a business car, you can deduct part, or all, of the cost from your business’s taxable profits. 

How much of the cost of the purchase you can deduct from your profit is dependent on several factors. The main points to consider are how you finance the purchase, how you use the vehicle and how environmentally friendly the vehicle is. 

Buying a car with a limited company, can be a great way to save on your tax bill. However, it is essential that you understand everything involved before you do. 

These are 4 important points you need to know about purchasing a vehicle through a limited company. 

How have you financed the purchase? 

How you pay for the new business car will affect the tax rate you have to pay on it. 

If your company takes out a loan to purchase the vehicle, or it is purchased on hire-purchase, you will only be able to deduct the interest payments as a business expense. You will not be able to deduct the loan itself as a business expense.  

If you lease a vehicle for use by the company, but you do not buy it outright, you will be able to claim the monthly payments as a business expense. 

Other maintenance costs involved with owning a business car, such as insurance, can be claimed as business expenses for Corporation Tax.

Action Points

  • Determine the financing method for the business car (loan, hire-purchase, or lease).
  • Calculate and deduct interest payments from a loan or hire-purchase as a business expense.
  • Understand that the principal amount of the loan or hire purchase cannot be deducted as a business expense.
  • If leasing, prepare to claim the entire monthly lease payments as a business expense.
  • Keep records of all maintenance costs like insurance, as these can be claimed as business expenses for Corporation Tax.

Will the vehicle be used for purely business purposes? 

If your car is used solely for business-related purposes, you will be allowed to claim VAT back on the purchase. 

If your company vehicle is used for personal purposes outside of the business, this is considered a Benefit-In-Kind (BIK). A benefit-in-kind is anything HMRC considers to be a benefit or a perk on top of your salary. Your business will be taxed on benefits-in-kind.

To reclaim the VAT on your company car you will need to be able to prove to HMRC that the vehicle is not and cannot be used by you or your employees for personal reasons. For example, do you have a company car that is always kept on stand-by at the dental practice for use by the business? That can be considered an exemption. 

HMRC does not consider your normal commute to and from work to be a business use, so you will not be able to claim VAT on your vehicle if it is primarily used for commuting. 

You can also claim back VAT on vehicles which are used as part of your employee’s routine duties. For instance, vehicles used for teaching people how to drive, taxis and vehicles which are primarily loaned in self-drive schemes.

Action Points

  • Assess the vehicle’s usage to ensure it’s strictly for business purposes.
  • Document and maintain proof that the vehicle is not used for personal reasons, to qualify for VAT reclaim.
  • Be aware that personal use of the vehicle, including commuting, makes it subject to Benefit-In-Kind tax.
  • Ensure the vehicle is designated for business-only activities, possibly keeping it on-site to reinforce this.
  • Keep detailed records of the vehicle’s use in employee routine duties to support VAT claims on such usage.

Is your company vehicle environmentally-friendly? 

How much tax you pay on your company vehicle is also dependent on the CO2 emissions it produces and the date on which you bought it. This applies to both the tax rate of any benefits-in-kind and the capital allowances you can claim on the cost of buying the vehicle. 

You can find out more about the difference between different emissions and dates of purchase, and how they affect the capital allowance rate you pay on the .gov.uk website here.

For the most part, the more CO2 emissions produced by your company car, the more tax you will have to pay. 

However, it is important to remember that the criteria also change according to how old your car is. The newer your car is, the greener it will need to be if you want to claim back on tax.

Action Point

  • Evaluate the CO2 emissions of your company vehicle to understand the potential tax implications.
  • Consider the vehicle’s purchase date, as newer cars require lower emissions to qualify for tax benefits.
  • Explore First-Year Allowances for vehicles that meet eco-friendly standards to deduct 100% of the purchase cost.
  • Determine if your vehicle qualifies for the Main Rate pool to claim 18% against taxable profits.
  • Assess if your vehicle falls into the Special Rate band, allowing a 6% claim, aimed at discouraging the purchase of high-emission vehicles.

For instance, this is a table from the Government’s page on business cars: 

Cars bought from April 2021

Description of carWhat you can claim
New and unused, CO2 emissions are 0g/km (or car is electric)First year allowances
New and unused, CO2 emissions are between 1g/km and 50g/kmMain rate allowances
Second hand, CO2 emissions are between 1g/km and 50g/km (or car is electric)Main rate allowances
New or second hand, CO2 emissions are above 50g/kmSpecial rate allowances

Compare this with the rates for cars bought between April 2009 and April 2013:

Cars bought between April 2009 and April 2013

Description of carWhat you can claim
New and unused, CO2 emissions are 110g/km or less (or car is electric)First year allowances
New and unused, CO2 emissions are between 110g/km and 160g/kmMain rate allowances
Second hand, CO2 emissions are 160g/km or less (or car is electric)Main rate allowances
New or second hand, CO2 emissions above 160g/kmSpecial rate allowances

Vehicles which meet the criteria for First-Year Allowances can have 100% of their cost of purchase deducted from the business’s taxable profits. This is intended to encourage British businesses to go green and purchase environmentally-friendly assets. 

The Main Rate pool allows you to claim 18% of the cost of the purchase against your taxable profit. 

The Special Rate band allows you to claim just 6% of the cost of the purchase. This is intended to discourage British businesses from buying environmentally-unfriendly assets. 

You can calculate the tax band for your company car, according to its CO2 emissions, fuel consumption and date of purchase on the gov.uk website here.

Contact us to find out more

How much tax do you need to pay on the fuel for your business car?

If your company owns a business car, you may be required to pay tax on the fuel required. 

Again, how much tax you pay on the fuel will depend on the CO2 emissions and whether it is used for private or solely for business purposes. 

If your business car is only used for business purposes then you will need to be able to prove this to HMRC. This is one of the reasons why it is so important to keep detailed records like submitted travel expenses and mileage reports. You can use these to show HMRC that all of the consumed fuel was used for business purposes, and not personal use. 

If you cannot prove this, or you have indeed used the car (and thus the fuel) for personal reasons, this will be considered a benefit-in-kind. Therefore, you will need to pay tax on the benefit-in-kind fuel usage. 

If you can show HMRC that the vehicle has not been used for anything other than company business, you will not need to pay any additional benefit-in-kind tax. You will also be able to reclaim the full VAT amount on the fuel. 

You will also not have to pay VAT on the fuel usage if the vehicle is used in certain other circumstances. For instance, cars used for business journeys such as those that are part of the employee’s normal routines like a tradesperson travelling to appointments (this does not include your normal commute to work), or one of your associates travelling to a temporary place of work. 

Action Points

  • Assess the CO2 emissions and usage of the business car to determine fuel tax liability.
  • Maintain detailed records, including travel expenses and mileage reports, to substantiate business-only use of fuel.
  • Be prepared to provide HMRC with evidence that the fuel was exclusively used for business purposes to avoid benefit-in-kind tax.
  • Reclaim full VAT on fuel for vehicles proven to be used solely for business activities.
  • Understand the specific circumstances under which VAT on fuel usage is not applicable, such as business journeys excluding regular commutes.

You can find out more about exemptions for tax payments on fuel on the gov.uk website here.

Should you buy a business car via your dental practice? 

So, are you better off purchasing a business car through your limited company or privately? 

Let’s take a look at an example: 

Harry is a dental practice owner who owns a limited company who wants to buy a business car at around £40,000.

Buying the car himself:

Harry can declare a £40,000 dividend from his limited company and use that to purchase a car. Harry has to pay 32.5% as a higher-rate taxpayer. This comes out to £13,000 in income tax he has to pay.

Buying the car via a limited company:

Harry could instead buy the care via his limited company. Since there is no dividend declared, there’s no added income tax. Harry’s capital allowances will also allow him to claim back £7,600 in corporation tax. In the current tax year, the benefits-in-kind tax rate is only 1%, meaning the tax on them will be minimal.

This means that Harry is better off to the tune of £20,600 by purchasing his business car through his limited company. 

Action Points

  • Evaluate the financial benefits of purchasing the car through your dental practice’s limited company versus personal purchase.
  • Consider the tax implications of declaring a £40,000 dividend for personal purchase and the resulting 32.5% income tax.
  • Explore the option of purchasing the car directly through the limited company to avoid dividend tax and capitalize on capital allowances.
  • Calculate potential corporation tax savings and the minimal benefits-in-kind tax rate when purchasing through the company.
  • Assess the overall financial advantage, in Harry’s case, a saving of £20,600, by opting for a company purchase.

Our Expert Opinion

“Buying car through your business is a complex thing. So get the right advice specific to your business and car needs. Do this wrong and you could pay much more tax than needed!”

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.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Corporation Tax

Most companies will generally pay corporation tax on both their income as well as their capital gains tax.

For the financial year beginning on 1st April 2021, all companies (except for those in the oil and gas sector) will pay the same flat rate of 19% corporation tax. This rate will also continue into the financial year of 2022.

In 2023, the corporation tax rate will increase to 25% which was announced during March 2021.

You must pay Corporation Tax on profits form doing business as:

  • A limited company
  • A club, co-operative, or any unincorporated association
  • Any foreign company with a UK office or branch

Profits you pay Corporation Tax on

Taxable profits for Corporation Tax include the money your company makes from:

  • Investments
  • Doing business (trading profits)
  • Selling assets for a profit

Calculating Your Company’s Effective Tax Rate

From April 2023 corporation tax will not only get increased, but it will also become a bit more complicated. There will be two official corporation tax rates:

  • Small profits rate: 19%
  • Main rate 25%

Companies with taxable profits of £50,000 or less will continue to pay 19% tax on all their profits. Companies with taxable profits of more than £250,000 will pay 25% tax on all their profits.

If profits are between £50,000 or £250,000 a ‘marginal relief’ calculation will be made. The practice effect of this is that there will effective be three different corporation tax rates:

First £50,000: 19%

Between £50,000 and £250,000: 26.5%

Over £250,000: 25%

Multiple Companies

There are many company owners who think about setting up a second company which is separate from their existing business. Often there are a few commercial reasons for using more than one company including:

  • Reducing risk and limiting liability
  • Involve different shareholders
  • Enable a stand-alone sale of each business

With corporation tax increasing in the near future, it is possible for multiple companies with one owner, enjoying up to £50,0000 of profit taxed at 19%. However, in order to achieve this the companies must not be associated companies.

Contact us to find out more

Associated Company Rules

When the new corporation tax rates come into operation within the next couple of years, to prevent people artificially spreading their business activities across multiple companies, the £50,000 lower limit and £250,000 upper limit will be divided up if there are any associated companies.

A company will only be associated with another company if:

  • One company controls the other company
  • Both are under the control of the same person / people

Family Members and Business Partners

When deciding who controls a company, your associates interests are treated as your own if there is substantial commercial interdependence between the companies.

Business associates include:

  • Your spouse or civil partner
  • Close relatives
  • Legal business partners

Trading Companies vs Investment Companies

A trading company is essentially a company that is involved in regular business activities such as a company that sells goods online or a catering company or a firm. Common types of non-trading companies include those that hold substantial investments in financial securities or property or earn substantial royalty income.

Corporation Tax

If your company is mainly engaged in non-trading activities, in 2021 it will be paying corporation tax at the same rate as most other companies (19%). However, when the new corporation tax rates come into effect, a lot of these investment companies will have to pay the main rate of corporation tax which will be a rate of 25% on all their profits.

This is because any company classed as a close investment holding company (CIC) will not be able to benefit from the small profits rate of 19%. The company will be forced to pay corporation tax at the main rate on all profits.

Companies that mainly derive their profits from renting properties to unconnected third parties (not to family members, etc) are excluded from the CIC provisions. Hence, the majority of property investment companies will be allowed to enjoy the small profits rate.

If a company has too many non-trading activities (including most property investment and property letting) it may lose its trading status for capital gains tax purposes. This will result in the loss of two important CGT reliefs:

  • Business Asset Disposal Relief
  • Holdover Relief

Business Asset Disposal Relief

Business Asset Disposal Relief allows you to pay capital gains tax at just 10% (instead of 20%) when you sell your company.

Holdover Relief allows you to give shares in the business to your children, common-law unmarried partner, or other individuals and postpone CGT. You do not need Holdover Relief to transfer shares to your spouse because such transfers are always exempt.

A company will only lose its trading status for CGT purposes if it has ‘substantial’ non-trading activities. Unfortunately to HMRC ‘substantial’ usually means as little as 20% of various measures such as:

  • Expenses
  • Assets
  • Profits
  • Turnover
  • Directors’ and employees’ time

HMRC may attempt to apply the 20% rule to any of the above measures.

Inheritance Tax Shares in trading companies usually qualify for business property relief. This means they can be passed on free from inheritance tax. However, if the company holds investments (including any rental properties), this could result in the loss of business property relief.

The qualification criteria are more generous than for CGT purposes and a company generally only loses its trading status for inheritance tax purposes if it is either wholly or mainly involved in investment related activities. To be on the safe side you will want to ensure that the company’s qualifying activities exceed 50% of each of the measures listed above (e.g. turnover, time, profits etc).

Companies registered as Tax Shelters Corporation tax is often a lot lower than the income tax and national insurance paid by sole traders and partnerships. Companies don’t always pay less tax than self-employed business owners but, as profits increase, the tax savings also naturally increase.

A business owner will therefore potentially have a lot more after-tax profit left to reinvest. Companies are normally most powerful as tax shelters when profits are reinvested. Most company owners need to extract money for their own personal use. At this point additional tax may be payable. The income tax payable on dividends reduces the tax benefits of using a company in many cases.

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.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Capital Gains Tax

Capital Gains Tax is a tax on the profit when you sell an asset that’s increased in value. It is the financial gain or profit you make that is taxed, not the amount of money you receive altogether.

Some assets are tax-free. If all your gains in a year are under your tax-free allowance, you do not have to pay Capital Gains Tax.

Capital Gains Tax Rates

There are two main rates of capital gains tax. These are:

  • 10% Basic rate taxpayers
  • 20% Higher rate taxpayers

With gains arising from disposals of residential properties, the 18 and 28% rates still apply. If you are entitled to Business Asset Disposal Relief, the tax rate is set at 10%. 

If you’re entitled to Business Asset Disposal Relief (previously called Entrepreneurs Relief) the tax rate is 10%. This relief is generally only available when you sell a business. Unfortunately, the old 18% and 28% rates still apply to gains arising on disposals of residential property. They also continue to apply to “carried interest”, typically profits made by hedge fund managers and private equity managers. The 10% and 20% rates mainly benefit:

  • Those disposing of commercial property (except where a business owner disposes of his trading premises and Business Asset Disposal Relief is available)
  • Stock market investors (although many investors’ gains are tax free thanks to the £12,300 annual CGT exemption or by investing via an ISA or SIPP)
  • Property investors who use a company to invest in property, when the company itself is sold or wound up
  • Owners of trading companies who do not qualify for Business Asset Disposal Relief

Basic Rate Band

If you are a basic rate taxpayer, you can pay 10% or 18% capital gains tax on some or all your taxable capital gains. The 18% rate applies to residential property and the 10% rate applies to most other assets.

The basic-rate band is £37,700 this year (2021) so you can have up to £37,500 of capital gains taxed at these lower rates. It is important to note, the basic rate band will be £37,700 until the end of the 2025/26 tax year. You can only benefit from these lower CGT rates if your taxable income (for example your salary, rental income, or dividend income) does not use up your basic-rate band.

The Annual Capital Gains Tax Exemption

The annual exemption is £12,300. In other words, capital gains of up to £12,300 can be realised tax free during the current tax year. The exemption is fixed at £12,300 until the end of 2025/26 as part of the Government’s Big Freeze. Before the current freeze the CGT exemption had been increased by less than inflation for several years and, coupled with reductions in the basic rate band, means the Government has been increasing the CGT haul without increasing tax rates. Where possible, you should consider using this exemption before the end of the tax year on 5 April 2022. After that date, this year’s exemption is lost completely. It is essentially a case of ‘use it or lose it’.

Further Annual Exemption Benefits Couples enjoy one capital gains tax exemption each so they can have £24,600 of tax-free capital gains per year. Minor children also have their own annual exemption. The estate of a deceased person has its own annual exemption in the tax year of the death and the following two tax years. Trusts also have their own annual exemption equal to half of the annual exemption available to individuals (i.e., £6,150). However, this amount must be sub-divided amongst all of the trusts set up by the same settlor.

Contact us to find out more

Bed and Breakfasting

The old practice known as bed and breakfasting is no longer possible in its simplest form (selling assets, usually quoted shares, and buying them back the next day in order to utilise the annual exemption). However, there are still a number of ways in which the annual exemption can be used such as:

  • Wait 31 days before buying the shares back. This strategy will not appeal to those who wish to remain fully invested.
  • Bed and Spouse. Despite its name, this strategy can be used by all couples (married or not). One partner sells the shares and the other one makes an equivalent purchase. (For married couples and civil partners, the repurchase must be made on the open market – a direct sale from one spouse or partner to the other will not have the desired effect.)
  • Bed and ISA – sell the shares to use your annual exemption and buy them back through an ISA.

Spreading Asset Sales

Property investors who want to sell more than one property should consider spreading their sales over more than one tax year, where possible, to use more than one year’s worth of CGT exemption. This will save a couple up to £6,888 per year in capital gains tax (£12,300 x 2 x 28%). Main Residence Relief Principal private residence (PPR) relief protects your main residence from capital gains tax. For disposals taking place from 6 April 2020 onwards it covers the period during which the property was your main residence and the last 9 months before selling (previously 18 months). Any property which has been your main residence and has been rented out at some point used to qualify for private lettings relief of up to £40,000 per person.

However, for disposals taking place from 6 April 2020 onwards private letting relief is restricted to periods where the owner is in ‘shared occupancy’ with a tenant. In other words, it is now restricted to periods when you are renting out part of your home while it is still your main residence.

Main Residence Relief

Principal private residence (PPR) relief protects your main residence from capital gains tax. For disposals taking place from 6 April 2020 onwards it covers the period during which the property was your main residence and the last 9 months before selling (previously 18 months). Any property which has been your main residence and has been rented out at some point used to qualify for private lettings relief of up to £40,000 per person. However, for disposals taking place from 6 April 2020 onwards private letting relief is restricted to periods where the owner is in ‘shared occupancy’ with a tenant. In other words, it is now restricted to periods when you are renting out part of your home while it is still your main residence.

Commercial Property Capital Gains

The main changes in recent times include:

  • A reduction from 28% to 20% in the CGT rate applying to commercial property sales (18% to 10% where some of your basic-rate band is not used up by your income).
  • CGT on non-resident capital gains. Until recently non-residents did not pay CGT when they sold commercial property located in the UK, for example offices, shops, warehouses and agricultural land. Commercial property gains that arise after 6 April 2019 are now subject to tax. Tax will only be payable on any increase in value from this date. They must file a non-resident capital gains tax return and pay the tax within 30 days of the sale.

Capital Losses

Capital losses are automatically set off against capital gains arising in the same tax year. Any surplus losses are carried forward to set off against future gains (but only to the extent that future gains exceed the annual exemption, so the annual exemption will not be wasted).

Generally speaking, capital losses may not be carried back to earlier tax years. The capital loss rules have a couple of important practical implications:

  • Losses must be realised by 5 April 2022 in order to be set off against 2021/22 capital gains.
  • If the losses you realise during the current tax year take your capital gains below the level of the annual exemption (£12,300), some of the annual exemption is wasted.

The timing of the disposal of assets standing at a loss should therefore be considered carefully.

Business Asset Disposal Relief

Business Asset Disposal relief was previously known as Entrepreneurs Relief. It allows each individual to have capital gains for a lifetime of £1million taxed at just 10%. In the March 2020 budget, the lifetime limit was drastically reduced from £10 million to £1 million which is what the current rate is set at.

As the lifetime limit is now a lot less generous than it used to be, it may now be necessary for you to spread assets among various family members to save CGT.

Who Qualifies for This Relief?

This relief is made to benefit owners of trading businesses which are essentially regular businesses.

A business will lose its trading status when it owns significant investments including any rental properties. If you are a property investor or simply own a few properties, the taxman does not treat you as a trading business owner, they will treat you only as a business owner.

Two types of property that can qualify for Business Asset Disposal Relief are:

  • The trading premises of your own business, for example, a retail unit owned by a sole trader.

Business Asset Disposal Relief can also be claimed when your partnership or company uses a property that you own personally. However, it is important to note that there are restrictions that apply.  

  • Furnished holiday lets (in certain circumstances) Company owners are entitled to Business Asset Disposal Relief when they sell their shares.

The main qualifying criteria are the following:

  • The company must be a ‘trading’ company
  • The company must be your company. Generally, this means you must own at least 5% of said company
  • You must be an employee of the company

Each of these rules must be satisfied for at least two years before the company is wound up or sold. Each of the rules must be satisfied for at least two years before the company has ceased trading. The disposal of the company should then take place within three years after trading has stopped. This time period used to be one year instead of two years. The new two-year rule applies for disposals taking place after 6th April 2019.

Investors Relief

This relief provides a 10% capital gains tax rate for investors in unlisted trading companies, providing they hold onto their shares for at least three years. Investors Relief only applies to gains on newly issued ordinary shares in unlisted companies. Buying shares from existing owners does not qualify. There is no minimum percentage shareholding. The relief is subject to a lifetime cap of £10 million of capital gains (unlike the £1 million cap now applying to Business Asset Disposal Relief). The investor generally cannot be an employee or officer of the company, and neither can any connected person (e.g., close family members).

However, the investor can become an unpaid director if he was not involved or connected with the company before investing. He can also become an employee 180 days after investing, providing there was no reasonable prospect of becoming an employee at the time the investment was made.

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Non-Residents

Quite a few years ago it was possible to leave the UK for a short period of time and avoid capital gains tax on any assets sold while non-resident.

The rules have now changed so that you have to remain a non-resident for at least five complete tax years in order to avoid any capital gains tax. Under the current anti-avoidance rules, to attempt to avoid capital gains tax your period of non-residence must last for more than five years.

This may mean you have to leave the UK for more than five years or you may have the option for less than five years, depending on whether ‘split-year treatment’ is available and whether you are treated as non-UK resident under the terms of a double tax agreement.

Over the last couple of years now, non-residents have had to pay CGT on some of their gains from UK residential property. Only the part of the gain arising after 5th April 2015 is subject to tax.

Recent Changes

Non-residents are also subject to capital gains tax on UK commercial property from 6th April 2019.

It is also important to note, where a non-resident sells shares in a company that derives at least 75% of its value from a UK property, the sale will now be subject to UK capital gains tax. The individual should own around 25% or more of the company.

Only gains arising after 5 April 2019 are subject to tax.

Reporting Capital Gains

You will need to report capital gains arising during the year on your tax return if:

  • Your total sale proceeds for capital disposals made during the year exceed four times the annual exemption or,
  • You have any capital gains tax liability.

If you sell a property and the gain is completely covered by the principal private residence exemption (e.g., the sale of your main home), it does not have to be reported on your tax return.

It is also very important to report capital disposals that give rise to an overall capital loss for the tax year, so that you can carry the loss forward to future years.

CGT Payments – Residential Property

Normally capital gains tax has to be paid by 31 January after the end of the tax year. From 6 April 2020, UK residents who sell residential property must make a pre-payment of capital gains tax (payment on account). This payment, along with the submission of a return, must be made within 30 days of the property’s sale.

Company Capital Gains

Indexation relief on capital gains made by companies has been frozen with effect from 31 December 2017.

This means that the relief available on disposals from 1 January 2018 onwards will be limited to the increase in the Retail Prices Index up to December 2017.

This is a major blow to property investors who hold investment properties inside a company and business owners who hold their premises inside a company.

Indexation relief has protected companies from paying corporation tax on any rise in a property’s value which is simply down to inflation. 

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.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Inheritance Tax

The inheritance tax nil rate band has been frozen at its current level of £325,000 since 6th April 2009. The nil rate band is the amount of your estate that is exempt from inheritance tax. 

It will remain at its current level of £325,000 until 5th April 2026 – a 17-year freeze! However, since 6th April 2017, a new additional nil rate band has been available for the ‘family home’.

Click here to read our guide on income tax and National Insurance.

Generally speaking, effective inheritance tax planning should be carried out on a long-term basis. However, it is worth remembering the following points, which should be considered on an annual basis. 

Annual exemption

The first £3,000 of gifts made by any individual during each tax year is completely exempt for inheritance tax. In addition to this, if the previous year’s annual exemption was not fully utilised, it can be carried forward into the following (current) tax year.

This means, in one tax year you are able to have up to £6000 of gifts that will be exempt from any tax only if you have not made any gifts during the previous tax year.

This exemption is specific to a per person basis, so married couples can also make gifts of £3,000 each.

Small Gifts Exemption

Gifts of up to £250 per tax year made to any one individual are also exempt from any inheritance tax and do not count towards the annual exemption. These types of small gifts are an exemption for you as you can make as many of these gifts as you like to different people.

However, the annual exemption cannot be used for further gifts to the same recipient in the same tax year. 

Habitual Gifts Out of Income

Habitual gifts out of income are an exemption from inheritance tax, in order for these gifts to be classed as ‘habitual’, they need to be made consistently for a number of years. Which is why it is important to remember to keep these up every tax year. 

The Family Home

An additional nil rate band is available for the ‘family home’ for any deaths occurring after 6 April 2017. This exemption is only available on a property which has been the deceased residence at some point during their life. If the deceased has passed while owning more than one or multiple qualifying properties, the personal electives can elect which property this exemption should apply to.

The exemption is only applied once the property is passed. This is usually done to a direct descendant of the deceased and in this case, any stepchildren, foster children or adopted children are all accorded the same status as one another for this sole purpose.

Similar to the £325,000 nil rate band, any unused proportion of the exemption will pass to the deceased’s partner or spouse.

When a person downsizes or ceases to own a home after 8 July 2015, the residence nil rate band is available to them as well as assets of an equivalent value, up to the value of the additional nil-rate band, are passed to direct descendants.

The residence nil-rate band that was introduced in 2017/18 and increased from £100,000 to its current value to £175,000. This level is set to remain until 5 April 2026.

Click here to read more about inheritance tax.

Inheritance Tax: Example

Margaret divorced her husband many years before her death in June 2021.

She leaves her estate, worth £600,000, to her daughter.

Margaret’s estate includes her former home, which is worth £250,000 at the time of her death. The residence nil rate band available for 2021/22 exempts £175,000 of the value of Margaret’s former home. This reduces her taxable estate to £425,000 before deduction of her main nil rate band of £325,000, which reduces it to £100,000.

The IHT payable on Margaret’s estate at 40% is thus £40,000. The residence nil rate band is withdrawn from estates worth in excess of £2 million (this threshold is also frozen until 5th April 2026).

This withdrawal is at the rate of £1 for every £2 by which the estate exceeds £2 million. Any mortgages or other loans secured over a property will have to be taken into account when allocating the exemption. For example, where the deceased held a property worth £250,000 which was subject to a mortgage of £180,000, the exemption will be limited to just £70,000.

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.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

A Guide to Income Tax and National Insurance

Income Tax

The 2021/2022 tax year begins 6 April 2021 and ends 5 April 2022 and the following will explain how most individuals will have to pay their income tax:

  • 0% on the first £12,570 (personal allowance)
  • 20% on the next £37,700 (basic-rate band)
  • 40% above £50,270 (Higher-rate threshold)

Basic-rate taxpayer explained

Arun earns a salary of £30,000. This is how his income for 2021/2022 can be calculated:

  • 0% on first 12,570 = £0
  • 20% on the next £17,430 = £3,486
  • Total income tax bill = £3,486

Higher-rate taxpayer explained

Arun is a sole trader and had profits of £60,000. This is how his income tax for 2021/22 can be calculated:

0% on first £12,570 = £0

20% on next £37,700 = £7,540

40% on final £9,730 = £3,892

Total income tax bill = £11,432

Read our top 10 tax saving tips here.

Marriage Allowance

Marriage tax allowance allows you to transfer £1,260 of your personal allowance (this is the same amount you can earn tax-free each tax year) to your spouse or civil partner if they earn more than you. It is free to apply for Marriage Allowance. This can reduce your tax bill by £252 every tax year.

In order to benefit from this allowance as a couple, you need to earn less than your partner and have an income of less than £12,570. Your partner’s income has to range between £12,502 and £50,270 for you to be eligible.

You are able to backdate your claim to include any tax year since 5 April 2017 that you were eligible for Marriage Allowance.

In order to register for Marriage Allowance register at: www.gov.uk/marriageallowance

Different incomes and their tax levels

Income between £100,000 and £125,140

If your income exceeds the £100,00, your personal income tax allowance is gradually taken away from you. The more you earn, the less you get for your personal allowance. It is reduced by £1 for every £2 you earn above £100,000. This means that if your income exceeds £125,140 this year, you will have no personal allowance at all.

It is reduced by £1 every £2 you earn after £100,000.

If you are earning over £100,00 this tax will really take its toll on you.

Paying 60% tax

If you are earning a high income of £100,00 or more, the effect is that anyone earning this or higher will face a hefty marginal income tax rate of 60%.

Income over £150,000

Once your income rises above £150,000, you will have to start paying income tax at 45% on most types of your income. This is also known as the additional rate of tax.

You can find out more about how to reduce your tax here.

What income is taxed?

The above tax rates apply to most types on income including:

  • Salaries
  • Pensions
  • Self-employment profits
  • Rental profits
  • Sole traders and partnerships

Many types of income are also subject to national insurance, whereas some types of income are subject to different income tax rates.

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Dividends

Many individuals receive dividends from stock market companies or from their own private companies. You may get dividend payments if you own shares in a company. You can earn some of your dividend income tax free each year.

You do not have to pay tax on any dividend income that falls within your personal allowance. This is the amount of income you earn per tax year that is tax free.

You do not have to pay tax on dividends from share in an ISA or any dividends received from a pension. You also get a dividend allowance each year.

You only pay tax on any dividend income above the dividend allowance.

For dividends that are taxable, the tax rates on those dividends are usually lower than other types of income. This is due to the fact that dividends are paid out after companies’ after-tax profits. This essentially means that dividend income is taxed twice.

Dividend tax credits have been abolished since 2016. Therefore, it is no longer necessary to gross up your dividends to calculate your tax. It is now a lot simpler, as all tax calculations now work with cash dividends.

Although that is great news, it also comes with some bad news: new tax rates for cash dividends have been introduced. These new rates are 7.5% higher than the previous ones. However, due to the ‘dividend allowance’, the first £2,000 dividend income you receive is completely tax free. Regardless of income, all taxpayers can benefit from this allowance.

For those receiving dividends, these following tax rates apply:

  • Basic-rate taxpayers: 7.5%
  • Higher-rate taxpayers: 32.5%
  • Additional-rate taxpayers: 38.1%

These rates will always be subject to the highest possible tax rate as dividends are always treated as the top slice of your income.

Click here to read our blog on 10 tax saving tips for vets.

How dividend allowance works

The dividend allowance is available for anyone (regardless of income) who has dividend income. The dividend allowance means that you will not have to pay tax on the first £5,000 of the dividend income. The dividend allowance is not given as an additional standalone tax-free amount of £2,000. 

Instead, it usually uses up some of your basic-rate band of higher-rate band. Dividends aren’t treated as sole income; they are treated as the top addition to your income and is, therefore, taxed at your highest marginal rate. The dividend allowance exempts the bottom £2,000 of that income from tax.

This means that if you have dividend income taxed at both x7.5% and 32.5%, the allowance will exempt some of the income taxed at 7.5%.

The recent changes in dividend tax rates includes an increase that was designed to extract more tax from those company owners who take most of their income as dividends. The main beneficiaries are higher-rate taxpayers and additional-rate taxpayers who receive relatively small amounts of income which is usually accumulated from stock market investments.

Changes in tax laws over the years has meant that if your investments were not stored and sheltered in a pension, an ISA or a capital trust you would have had to pay 25% or 30.6% tax on all dividend income. However, at present, you can receive £2,000 tax free.

Action Points

  • Review your dividend income to determine if it falls within the £2,000 dividend allowance for tax-free treatment.
  • Understand that the dividend allowance consumes part of your basic or higher-rate tax band, rather than acting as a separate tax-free amount.
  • Assess how your dividends are taxed, considering they are added on top of your other income and taxed at your highest marginal rate.
  • If applicable, identify portions of your dividend income that may be taxed at different rates (e.g., 7.5% and 32.5%) and apply the allowance to minimize tax liability.
  • Stay informed about recent changes in dividend tax rates, especially if you are a company owner who receives significant income through dividends.
  • Consider financial planning strategies such as investing in pensions, ISAs, or capital trusts to shelter dividend income from higher tax rates.

Income tax examples

Example 1:

In 2021/22 Brendan has a pension income of £49,270 and dividend income of £6,000.

The first £12,570 of his pension is covered by his personal allowance and the next £36,700 is taxed at 20%.

This leaves him with £1,000 of basic-rate band remaining.

£2,000 of his dividend income is tax free. The first £1,000 uses up what’s left of his basic-rate band (preventing him from paying 7.5% tax), leaving £1,000 of dividend allowance to use in the higher-rate band (preventing him from paying 32.5% tax).

The final £4,000 of dividend income is taxed at the 32.5% higher rate. 10

Example 2:

In 2021/22 Julia has £60,000 of rental income and £3,000 of dividend income. Her rental income uses up her personal allowance and basic-rate band and some of it is taxed at the 40% higher rate.

The first £2,000 of her dividend income is covered by the dividend allowance, leaving £1,000 subject to tax at the 32.5% higher rate.

The dividend allowance does not use up her basic-rate band because none of her dividends fall into the basic-rate band.

Example 3:

In 2021/22 Leon has a £130,000 salary and £50,000 dividend. With this much income his personal allowance is completely withdrawn.

The first £2,000 of his dividend income is covered by the dividend allowance, leaving £18,000 taxed at the 32.5% higher rate. Along with his salary this takes Leon up to the £150,000 additional rate threshold.

The final £30,000 of his dividend income is taxed at 38.1%.

Note, Leon has dividend income taxed at both the higher rate and additional rate. The dividend allowance reduces the amount of his dividend income taxed at the 32.5% higher rate.

Example 4:

In 2021/22 Martin has a £100,000 salary, £50,000 of rental income and £50,000 of dividend income. With this much income his personal allowance is completely withdrawn.

His salary and rental income take him up to the £150,000 additional rate threshold. The first £2,000 of his dividend income is covered by the dividend allowance, leaving £48,000 taxed at the 38.1% additional rate. The dividend allowance reduces the amount of his dividend income taxed at the additional rate.

UK tax on foreign dividends

Buying into shares worldwide is very common these days, particularly within US companies. This impacts your dividend income as these foreign dividends are often subject to withholding tax.

Usually, the overseas company will deduct tax before actually paying you the dividend. It also works in your favour that the UK has double tax treaties with many countries overseas that reduces the amount of payable foreign tax, this is usually between 10% and 15%.

The dividend withholding tax rate in the US is normally 30% but due to the double tax agreement between the UK and US, the amount of withholding tax can now be reduced to 15%. This can be done by completing form W-8BEN, issued by the US Internal Revenue Service (IRS). In many cases, mostly with online investment, stockbrokers will handle these forms for you on your behalf to ensure a smooth process for you.

This double tax agreement also provides a specific exemption for pension schemes. This means that US dividends can be received tax-free if the shares are held inside a pension scheme. If your overseas shares are held outside a pension scheme (e.g., SIPP) or an ISA, your income from your overseas dividends will be subject to UK income tax. The double tax agreement does not recognise ISAs. ISA investors will still be subject to the 15% withholding tax.

You may be able to claim Foreign Tax Credit Relief when you submit your tax return. This allows the overseas tax paid to be deducted from the owed amount of UK tax. However, the amount deducted cannot exceed the UK tax payable on the income.

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Interest Income

Personal Savings Allowance

Your Personal Savings Allowance is provided at a 0% tax rate for up to £1,000 of your interest income if you are a basic-rate taxpayer and up to £500 if you are a higher-rate taxpayer. The more you earn, the more your personal saving allowance decreases. Additional rate taxpayers do not receive this allowance.

The amount of income that falls within your savings allowance will still count towards your basic-rate or higher-rate limit and can, therefore, affect the level of savings allowance you are entitled to and the rate of tax payable on any savings income you receive in excess of this allowance.

The starting rate band

There is a 0% starting rate for up to £5,000 of interest income. However, in most cases only those who are on low incomes can use it. You are only able to benefit from this 0% starting rate this tax year if your non-savings income is less than £17,570 (this is £12,570 personal allowance + £5,000 starting rate band). Normally, your non-savings income will include your salary and pensions, but it does not include your dividends.

Many of you reading this probably won’t be able to use the 0% starting rate this is due to you having more than £17,570 of non-savings income. However, there may be another option for you. If you are unable to benefit from starting rate band, you may be able to benefit from the Personal Saving Allowance.

Future income tax changes

Rishi Sunak has promised that after the devasting affects of the pandemic, our government is not going to raise the rates of income tax, national insurance, or VAT. This means that most income tax thresholds and allowances will be frozen until 5th April 2026. This includes:

–          Personal allowance £12,570

–          Income tax higher rate 

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.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

How to Automate Your Finances with Xero and Hubdoc

In this webinar, Nathan takes you through the software that Samera use for all of our clients to automate their financial function and streamline their accounts.

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.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Navigating your Dental Practice Financial Future

In this webinar, Arun and Gurpreet discuss how best to structure your finance and accounts, as well as how to save money on your consumables.

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Accounts and Tax for Dentists Explained

Keeping your dental practice’s accounts organized and up-to-date isn’t always easy. It’s certainly rarely ever fun, but it is one of the most important aspects of being a dentist or practice owner. 

A well-kept set of accounts not only helps manage your cash flow and lower your tax bill, they will also be crucial whenever it comes to raising finance for your business

After 20 years of experience working with dental practices and through owning dental practices myself, it is evident that across the entire industry, many practices are using out-of-date procedures and technology to run their dental practice finances & accounting.

The days of handwriting ledgers, updating cumbersome spreadsheets, and sending boxes of invoices to your accountant at the last minute before the looming submission deadlines, fortunately no longer exist!

The last few years have seen a revolution in the accountancy world. The technology has evolved to the point that much of the sending and processing of invoices can be done with simple technology systems.

Going digital with your accounts doesn’t just mean an end to endless paperwork. It also reduces the amount of manpower required to process accounts, both in the dental practice and in the accountancy office, saving both you and your accountant time, effort, and money!

The Importance of Cloud Accounting Software

One thing we often see in common between poorly run practices is that they have yet to embrace digital accounting and cloud software. Some practices are still relying on paper records for their accounts. Paper records are on their way out and digital accounts are the future.

We have seen many cases of missed opportunities to save tax or improve the profits of a practice. Or at best, the benefits are achieved 6 –12 months too late due to historic accounts reporting.

Typically (and back in the day) there would be a one-off meeting with your accountant after your year-end to go through the historical figures and discuss ways to improve going forward.

The problem with this is the word “historic”. By the time your accounts are finalized and you’re sitting down with your accountant, it’s often 6 months after the year-end, meaning some of the data you’re analyzing could be 18 months old!

Real-time accounting is important because it brings so many benefits to a small business. It’s easier, simpler, faster, cheaper. In short, it’s just better.

Click here to find out more about our dental accountant services.

Benefits of Cloud Accounting Software for Dentists

Share and collaborate with your dental accountant.

By having everything available on the cloud, what you see on the cloud is also what your accountant sees too, allowing your accountant to see real-time information on your practice’s (or your personal) expenses, finances and accounts.

Most accountants will be able to provide advice on tactics and strategies to improve your practices finances, and this is far easier with a clear, instant view of your accounts.

Sharing your accounts and finances digitally with your accountant allows them a much clearer picture of the financial health of your business, which in turn helps you to collaborate more effectively with either them or any other financial advisors.

With constant updates and real-time data, you and your accountant will be able to analyse trends, manage cash flow and identify potential issues far earlier than with old-fashioned hardcopy accounts.

The technology allows you to collaborate and work together to improve the value of your dental practice performance easier than ever before.

You can use cloud-based software from any device with an internet connection. Online accounting means small business owners stay connected to their data and their accountants. The software can integrate with a whole ecosystem of add-ons. It’s scalable, cost effective and easy to use.

Anyone in your business that needs it can have access at any time. You can restrict and retain far more control over who has access to your personal information.

Click here to read more about our financial director services.

Monitoring and improving key performance areas

Software packages such as Xero allow you to automatically run a variety of financial reports for you to analyse over a whole variety of time periods.

For instance, most cloud accounting software packages allow you to run reports such as Profit and Loss, Balance Sheets and Cashflow Reports. You can also create your own templates for reports so that you can see the exact data and trends you want.

These reports make it far easier to keep track of your accounts and finances by doing a lot of the leg-work for you. Instead of wasting your time and effort poring over an entire month’s invoices to spot trends, simply run your favourite saved report and see the data instantly.

We advise clients to run such reports at least quarterly so they can assess and routinely judge and keep up with the performance of their dental practice.

This used to be an area that only large businesses with internal accounting teams could tap into. Nowadays, however, with the help of real-time accounting, any sized business can have access to this data to monitor and improve their practice performance.

If you want to make good decisions, you need to base those decisions on good and timely information. Without such information, changes that you make in your business will be more like wild guesses than informed decisions.

Knowing and understanding the key numbers in your business helps you and your advisors to spot trends and take appropriate action to improve your business’s performance. Your accountant can then spend time really adding value to your business, providing you with better advice and alerting you when things go wrong.

Click here to find out more about How Should a Dental Practice Organise its Finances.

Save money in your dental practice with cloud accounting

We had a client who was paying £450 a month for 3 days of bookkeeping (using manual keystrokes and traditional software). With the implementation of Xero (our preferred Cloud Accounting platform), this was reduced to half of that for a day, saving £4,500 for the year.

The point here is, there is amazing technology available to automate the majority of this necessary evil work. If you are not utilising this, you are basically throwing your money away.

In order to have a business that is operating to its best potential, accounting information needs to be in real-time and your accountant should be able to access this at any point. Not 6-18 months after the event, when it is often too late.

We saw another client recently who saved a whopping £200,000 in tax, simply through having up-to-date information that we had access to!

Watch our talk on saving time, money and tax in a dental practice.

Work smarter with accessible data in the cloud

The beauty of this software is the flexibility it gives you to run your business from work, home, or on the go. You can be confident that you have an up-to-date picture of how your business is doing, no matter where you are.

Software updates can be developed and delivered faster and more easily in the cloud. This means you don’t need to worry about installing the latest version and you’ll get access to new features instantly. With cloud accounting software, you have the option to run your business remotely, from anywhere in the world. And when data is fluid and accessible, the possibilities are endless.

Make quality decisions

With the technology available to small businesses today, there is absolutely no excuse to be using out-of-date, old fashioned accounting systems. You could be running a far more efficient and profitable dental practice simply by doing digital with your accounts!

By switching to digital cloud accounting software, by using the online functionality to share and collaborate with your accountants and financial advisors and by using the automatically-generated reports, you can ensure that you make better, quicker, more informed decisions to continually improve the efficiency and profitability of your practice.

By looking at the performance detailed in the reports you can identify and interpret areas that need changing in your dental practice, whether it means cutting costs, increasing fees, or increasing marketing activity.

Understanding the management reports can only help you run a more efficient and successful dental practice.

Traditional software problems

Small business accounting software that’s not available via the cloud can be tedious.

Traditionally, it can suck up far too much of your business’s time and effort. This doesn’t add value, and takes the fun out of being in business. Cloud software can save your company time and money.

  • The data in the system isn’t up-to-date and neither is the software. This means events such as changes in regulations cannot be reacted to in a timely manner and the benefits of adopting changes are 6-12 months delayed (or too late!).
  • It only works on one computer and data bounces from place to place. For example, on a USB drive. This is not secure or reliable.
  • Only one person has user access. Key people can’t access financial and customer details.
  • It’s costly and complicated to keep backups (if done at all).
  • It’s expensive, difficult and time consuming to upgrade the software.
  • Customer support is expensive and slow

Click here to find out more about our cyber security and IT support services.

Security and Business Continuity

As a small business owner, you might be concerned about a cloud service provider storing your data. But the cloud is one of the most secure ways to store information. For example, using cloud software, if your laptop is stolen, no one can access your data unless they have a login to the online account. With cloud software, this is where the data lives –as opposed to on your hard drive.

In the event of a natural disaster or fire, being in the cloud means business productivity doesn’t need to be affected because there’s no downtime. All of your information is safely and securely stored off site. As long as you have access to any computer or mobile device connected to the internet, you’re back up and running.

In addition to this, if you invite users to view your data, you can control the level of access. This is much more secure than the old-fashioned way of emailing your files or sending out a USB stick with your data on it.

Cloud-based software companies ensure that the security and privacy of data about you and your organisation is always airtight. If you use online banking, then you’re already primed to use cloud accounting.

Click here to read our 10 cyber security tips for dentists.

Action Points

  • Collaborate in real-time with your dental accountant via cloud-based accounting software to provide instant access to your financials.
  • Use the software’s automatic reporting features, like Profit and Loss or Cash Flow reports, to regularly monitor your practice’s financial health.
  • Save costs by automating bookkeeping tasks, reducing the need for manual entry and traditional bookkeeping services.
  • Make informed business decisions based on up-to-date financial data and reports, identifying areas for improvement or cost reduction.
  • Ensure data security and business continuity by using cloud-based software, which offers secure storage and access from any internet-connected device.

How to Use Cloud-Based Bookkeeping and Invoice-Scanning Software

The Samera Dental Accountants team are huge fans of using the latest cloud accountancy software. Samera is a Xero partner and can help implement the Xero software system into your practice. This will save you time, make the running of your business much more efficient, and at the same time provide very up to date information to you to help you make better decisions about your practice.

Introducing Xero into your practice will also save you money, and ensure at the end of the year you don’t have to send a box of papers to your dental accountant if it has all be book-kept by you through the year on Xero.

By introducing Xero into your Dental practice, both you and your Samera accountant can have access to the same data, enabling you to work together on growing and developing your practice.

With the software available to you today, there is no excuse to not be automating your finances in your dental practice. To do this, you need to make sure you are using cloud accounting software, like Xero. We use Xero to run our clients’ dental practice accounts and tax. 

When you rely on paper records, you waste time and effort paying invoices, sending files and documents, missing key financial trends and a real-time analysis of your accounts. 

Now, however, you can simply scan your invoices into software like Hubdoc. The key information is then extracted automatically and fed into Xero, which processes and prepares the accounts.

With your bank account securely connected to the process, your dental accountant can match off any payments that you make, any income that’s coming in, and reconcile the bank account quickly. All without waiting for paper records to be sent anywhere. 

Instead of having to keep hardcopy records of all your invoices, receipts and documents, storing them and then shipping them off to your accountant when needed, all you need is a smartphone or scanner!

Simply take a photo of your receipts, invoices etc. via the cloud accounting app, or scan the documents with a scanner, and send them off via the app or email.

All your invoices are also stored in Xero too, so trying to find an old invoice is easy as they all reside in the Cloud, accessible 24/7 from anywhere with an internet connection.

Another benefit of digital accounts is that you can also make payments directly from your cloud accounting software like Xero. Instead of paying each individual invoice separately, which is time-consuming, you can tick all the invoices you want to pay and make one single payment to all suppliers you choose.

This means you can process and prepare your dental practice management accounts much quicker and easier, which means the annual accounts are easier and quicker to prepare. All of this can really help you spot cash flow problems sooner and organise your tax calculations and payments. 

Simply put, when you automate your dental practice accounts and finances, you save yourself time, effort and money. 

Action Points

  • Adopt Xero cloud accounting software with Samera Dental Accountants’ support to streamline your dental practice’s bookkeeping, enabling real-time collaboration and financial management.
  • Automate invoice processing with Hubdoc and Xero, connecting your bank account for efficient payment reconciliations and eliminating the need for physical financial records.
  • Digitally store all receipts and invoices in Xero for easy access, and utilize its bulk payment features to manage supplier payments efficiently, saving time and enhancing cash flow.

How to Use Xero to Manage your Associate Accounts and Tax Return

Automating Your Finances with Xero and Hubdoc

How to Understand Your Dental Accounts and Tax Calculations

Running your dental accounts can often feel like the most dreaded and tedious aspect of the job. In this guide, we’ve tried to make accounts for dentists a little more simple. 

It can be easy to fall into the trap of thinking that only practice owners need to really worry about their accounts. As long as your tax bill is kept low and your money keeps moving, that’s all that matters right? Wrong. If you decide to start a dental practice of your own, or indeed if you ever try to raise a business loan, your dental accounts and financial records are going to be crucial.

You will most likely be able to produce a set of accounts without expert help. However, it is almost essential to engage a specialist dental accountant like Samera to go through your accounts with you, should you wish to raise finance.

Profit And Loss Accounts

our profit and loss accounts will show your turnover for each of the last 2 years, usually generated by your service sales. 

You will then list your cost of sales, such as materials. 

Underneath this, you will need to list your expenditures. Here is a list of the kind of costs you will need to include here: 

  • Protective clothing
  • Travel expenses 
  • Laundry
  • Use of Private residence
  • Vehicle running costs 
  • Professional indemnity insurance 
  • Printing, postage and stationery 
  • Training
  • Telecommunications and data
  • Accountancy fees
  • Professional subscriptions
  • Charitable donations 

You will then subtract these expenses from your gross profit. This will give you your net profit for the year. 

Balance Sheet

The balance sheet is also a key document and represents the financial health of your business. The profit and loss sheet shows you the financial situation for that year alone. 

On the other hand, the balance sheet includes all of your assets and liabilities. Assets are split into current and fixed assets. 

Typically for dental associate accounts, current assets will include your bank accounts and any money owed to you. Current assets are assets which can be expected to be sold or consumed within that fiscal year.

Fixed assets are tangible assets, such as loupes and their costs are included on the balance sheet and not the profit and loss sheet. This is because they are an asset of the business which you will theoretically use for many years, not as a one-off material within the fiscal year. The value will be depreciated across the period of its estimated useable life.

Liabilities are people or entities that you or the business owe money to.

Underneath your assets and liabilities, you need to list your Net Current Assets (subtract your total liabilities from your current assets), Total Assets Less Current Liabilities and Net Assets (current + fixed assets).

Balancing this all out is the Capital Account, which is where the accounts owner comes in. Here, you list your brought-forward profits from the previous year. You then list your new net profit for the year just ended. Then, off-setting all of that is what the owner has drawn for personal use, the money they’ve spent.

So, your brought-forward profits plus current year profits, minus drawings gives you your remaining cash reserves. This will also equal your assets minus liabilities (Net Assets).

In most cases, a financially healthy business will have a positive balance sheet. 

Tax For Dentists Explained 

Once you have properly organised your accounts, it’s time for the tax man to get involved. 

On your tax calculation record, you’ll need to include your income received (before tax is taken off). This will typically include your profit from self-employment (as an associate dentist), which you calculated on the profit and loss sheet, as well as interest received from your bank accounts (even if it is only a couple of pounds). This gives the Total Income Received. 

You then take away from this figure your pension contributions and your personal tax allowance. The remaining figure is your taxable profit. 

You will then list out your tax payments categorised by the tax band you need to pay, how much at the basic rate, how much at the higher rate and any additional rate. You will also need to list any taxable interest payments you have received. 

Also, you will need to report your National Insurance payments, which have different threshold bands. This will give you your total National Insurance liability. 

Adding these figures (Income Tax Charged and National Insurance liabilities) together gives you your total income tax. 

You should find that this figure is around 25% of your profit. This is why we recommend to our clients that they set aside 25% of their income to cover their tax bill. 

Click here to find out more about our tax advisory services for dentists.

Paying The Tax

The next document you need to draw up will be the tax payment summary. 

First, list your total tax payments due, which you calculated on the tax report. You will then minus any previous tax payments you have made for that year, as well as any deductions such as previous overpayments and rebates.

The resulting figure is the tax you currently owe for the financial year.

Remember, if your tax bill is over £1,000 you will need to make advance payments on next year’s tax bill, based on this year’s tax bill. You will be required to pay 50% of the total tax due in January and the remaining 50% in July. 

So, your total tax bill due on 31st January will be the tax you currently owe, plus your first advance payment on next year’s tax. 

Click here to listen to our podcast on how to legitimately reduce your tax bill.

What Dentists Can Claim On Expenses 

As a dentist you can only claim on expenses items which have been purchased for business purposes, the items you use for dentistry.

While you may be tempted to try and put everything through the books, this can quite often end you up in trouble with HMRC. That’s why the Samera team have put together a Dental Associates Expenses Guide.

So when it comes to preparing your annual tax return, a degree of good judgement needs to be used to assess whether something is allowable for tax purposes.

Travel from home to practice is a big no no, however, if you travel between practices on a regular basis and keep records to support such journey costs, then this is allowable for tax purposes. Mileage records must be maintained – HMRC just love to investigate such mileage claims and then find that there are not any!

If you use a computer for your business, then some or even all of the capital cost could be claimed on your behalf.

New loupes, or other new kit? Then potentially this can also be claimed for.

Good Judgement is Essential

In respect of training, if you are building on existing knowledge, then this is usually deemed to provide you with CPD, which can then be claimed for. However, brand new knowledge is usually not deemed to be allowable, so again some judgement needs to be used on this aspect.

Action Points

  • Engage a specialist dental accountant like Samera to navigate your dental accounts effectively, especially if you’re considering raising finances or starting your own practice.
  • Understand and regularly review your Profit and Loss accounts and Balance Sheet to grasp the financial health of your practice, including turnover, costs, net profit, assets, and liabilities.
  • Organize your tax calculations meticulously, incorporating income, pension contributions, personal allowances, tax bands, and National Insurance payments to accurately determine your tax liability.
  • Set aside approximately 25% of your income to cover your tax bill and be prepared for advance tax payments if your bill exceeds £1,000, splitting the payment into two installments in January and July.
  • Utilize the Samera team’s Dental Associates Expenses Guide to accurately claim allowable business expenses and apply good judgment to distinguish between allowable and non-allowable expenses for tax purposes.

Click here to read our guide on expenses for dentists.

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

How Can Dentists Reduce Their Tax Legitimately?

The Dental Business Guide Podcast Episode | 2nd February
George Bellamy and Arun Mehra

As a dental specialist, it’s essential to focus on providing the best care for your patients. But it’s also important to manage your finances well to ensure your practice remains profitable. One of the most significant expenses for any dentist is their tax bill. Dealing with taxes can be complex, but there are smart strategies that can legally help you reduce the amount of taxes you need to pay.

Let’s discuss some key techniques that dental specialists can use to lower their tax responsibilities. These include taking advantage of tax breaks and deductions and organising your practice in a tax-efficient manner. By following these tips, you can keep more of your hard-earned money in your pocket while still complying with tax regulations.

Click here to read our article on Financial tips for dentists.

The importance of reducing tax burdens for dentists

As a dental specialist, you aim to provide excellent care to your patients and run a successful dental practice. However, along with the rewards of your profession, come the challenges of managing your finances and dealing with various tax obligations. Paying taxes is a necessary part of running a business, but it can often feel like a heavy burden, leaving you with less income to reinvest in your practice or achieve personal financial goals.

That’s why it’s crucial for dental specialists to explore smart strategies to reduce their tax rates. By taking advantage of tax-saving opportunities and implementing effective tax-planning techniques, dentists can improve their financial position and keep more of their hard-earned money.

Lowering your tax rate not only improves your financial well-being but also allows you to allocate resources to areas that have the biggest impact on your dental practice. Whether it’s investing in advanced equipment, expanding your services, or providing comprehensive employee benefits, reducing your tax liability can pave the way for growth and success.

In this blog post, we will explore practical strategies that dental specialists can use to lower their tax rates. From understanding deductible expenses to utilising tax breaks and incentives specifically designed for the dental industry, we will provide you with valuable insights and useful tips to make informed decisions that can positively affect your bottom line.

Remember, it is essential to approach tax reduction strategies ethically and within the bounds of the law. By staying informed and working with qualified tax professionals, you can navigate the complex world of taxes with confidence and discover excellent opportunities to improve your financial situation. So, let’s dive in and explore smart techniques that can help dentists honestly reduce their tax rate and unlock their practice’s full potential.

Action Point

Explore tax-saving strategies like understanding deductible expenses, utilizing industry-specific tax breaks, investing in retirement plans, employing family members, and consulting with tax professionals to effectively reduce your tax rate and enhance your dental practice’s financial health.

Click here to read our blog on 10 Tax-saving tips for vets.

Understanding the unique tax challenges faced by dentists

Dental specialists, like many other professionals, face unique tax challenges that require a deep understanding of the dental industry and its specific tax rules. To handle their taxes well and improve their financial situation, dentists need to know about these challenges.

One major challenge is figuring out which expenses they can deduct from their taxes. Dentists often deal with a complex mix of deductible and non-deductible expenses, such as equipment purchases, office rent, employee salaries, and even continuing education costs. Knowing which expenses can be claimed as deductions is crucial for saving on taxes.

Another big challenge for dentists is managing the tax implications of owning a dental practice. Owning a practice involves various tax considerations, like choosing the best business structure (like sole ownership, partnership, or corporation) and understanding the tax effects of selling a practice. Staying updated on the ever-changing tax regulations is essential to follow the rules and minimise tax obligations.

Retirement planning can also be tricky for dentists due to the physical demands of their profession. Planning for a comfortable retirement is important, and dentists can benefit from knowing about tax advantages linked to retirement savings. These options can help them save for retirement while reducing their tax burden.

Moreover, dental specialists can explore specific tax incentives and credits designed for the dental industry. Taking advantage of tax breaks for investing in advanced dental technology or utilising research and development tax credits for innovative dental procedures can lead to significant tax savings.

Action Point

Dentists face unique tax challenges related to deductible expenses, practice ownership, retirement planning, and industry-specific tax incentives. Understanding these challenges is crucial for managing taxes effectively and improving financial outcomes in the dental profession.

Contact us to find out more

Utilising business deductions to lower taxable income

One of the best ways for dentists to legally reduce their taxes is by using business deductions. Business deductions are expenses that are necessary for running a dental practice and can be subtracted from your income, which ultimately lowers the amount of taxes you owe.

As a dentist, you have access to various tax breaks. Firstly, you can deduct the costs of supplies and equipment needed for your practice. This includes dental tools, x-ray machines, office furniture, and even the cost of dental materials like fillings and crowns.

In addition to these significant expenses, you can also deduct the costs of running your office. This includes rent or mortgage payments for your practice space, utilities like electricity and water, and even the expense of office supplies like paper, ink, and computer software.

Furthermore, don’t forget about the expenses related to your professional development. Continuing education courses, conferences, and professional memberships are deductible, as they are essential for improving and honing your skills as a dentist.

To take advantage of these deductions, it’s crucial to keep detailed records of all your expenses and consult with a qualified tax expert. By doing so, you can significantly decrease your taxable income and, in turn, reduce your tax burden as a dentist.

Action Plan

  • Understand Deductible Expenses: Dentists must navigate the complex landscape of deductible and non-deductible expenses. This includes distinguishing between equipment purchases, office rent, employee salaries, and continuing education costs. Knowing which expenses qualify as deductions is essential for maximizing tax savings.
  • Optimize Business Structure: Owning a dental practice brings unique tax considerations, such as choosing the most advantageous business structure (e.g., sole proprietorship, partnership, or corporation) and understanding the tax implications of practice sales. Keeping abreast of changing tax laws ensures compliance and minimizes tax liabilities.
  • Leverage Retirement Planning: Due to the demanding nature of their profession, dentists must strategically plan for retirement. Familiarity with tax-advantaged retirement savings options allows for efficient retirement planning while reducing current tax burdens.
  • Capitalize on Industry-Specific Tax Incentives: Dentists should explore tax incentives and credits specifically designed for the dental industry, such as deductions for investing in advanced dental technology or credits for innovative procedures. Utilizing these incentives can lead to substantial tax savings.
  • Maximize Business Deductions: By meticulously documenting necessary practice-related expenses, including supplies, equipment, office operations, and professional development, dentists can significantly lower their taxable income. Regular consultation with tax professionals ensures that all eligible deductions are claimed, optimizing tax outcomes.

Incorporating your dental practice for potential tax benefits

If you decide to turn your dental practice into a formal business entity, like a professional corporation (PC) or limited liability company (LLC), you can enjoy several tax benefits that may significantly reduce your overall tax burden. Creating a separate legal entity for your practice allows you to manage and deduct business expenses more efficiently, leading to potential tax savings. By having separate bank accounts and credit cards for your practice, it becomes easier to identify and claim deductible expenses, such as equipment purchases, office rent, employee salaries, and even continuing education costs.

Incorporating your dental practice can also open up additional opportunities for retirement planning. It allows you to contribute more pre-tax money to your retirement savings compared to being a sole proprietor. This helps secure your financial future while also reducing your taxable income in the present, leading to potential tax savings.

Another benefit of incorporating your dental practice is the possibility to take advantage of various business tax breaks and credits. For instance, you might be able to deduct expenses related to professional memberships, professional liability insurance payments, marketing and advertising costs, as well as costs for maintaining and upgrading your dental equipment and technology.

It’s important to note that the specific tax benefits and requirements of incorporating your dental practice may vary depending on your location and the specific structure you choose. Therefore, it is recommended to consult with a qualified tax professional or accountant specialising in dental practices to ensure you navigate the process correctly and maximise your tax savings while staying compliant with all relevant regulations and rules.

Listen to our episode on how dental practices should structure their finances in 2021.

Implementing tax planning strategies to optimise deductions and credits

Tax planning strategies can significantly reduce the tax burden for dental specialists. By taking advantage of deductions and credits, dentists can make the most of available tax benefits.

One effective strategy is to use all eligible deductions. Dentists can deduct various business expenses, such as equipment, supplies, and lab fees. Keeping detailed records and receipts is crucial to prove these deductions during tax filing. Additionally, dentists may qualify for deductions related to office rent or mortgage interest, utilities, insurance payments, and professional memberships.

Another important tax planning technique is to maximise available tax credits. Dentists should explore and understand the credits they may be eligible for, like the Research and Development Tax Credit or the Small Business Healthcare Tax Credit. These credits can significantly reduce tax liability and provide additional financial benefits.

Timing is also critical for tax planning. Dentists can strategically time their equipment or property purchases to take advantage of available tax deductions or depreciation benefits. By working with financial advisors or accountants, dentists can ensure they make these purchases at the most advantageous times for tax purposes.

Lastly, staying informed about changes in tax regulations and rules is essential. Tax codes can evolve, and new deductions or credits may become available. By staying up-to-date, dentists can adjust their tax planning strategies proactively to make the most of any relevant changes.

Tax planning strategies require careful consideration and should be executed with expertise. Dentists should consult with qualified tax professionals who specialise in working with medical professionals. This way, dentists can navigate the complexities of tax planning and legitimately reduce their tax burden in an effective manner.

Read more about tax saving tips for dentists.

Hiring a professional tax advisor with expertise in dental practices

Bringing in a professional tax advisor who specialises in dental practices can be a game-changer for reducing your tax burden as a dentist. These specialised advisors understand the unique tax challenges and opportunities that dentists face, so it might be tempting to handle your taxes on your own or rely on a general accountant.

These experts are well-informed about the dental industry and keep up with the latest tax laws and rules for dental practices. They can find deductions and tax breaks that you might not be aware of, ensuring you make the most of all suitable tax-saving strategies.

A professional tax consultant can also review your financial records, identify potential areas of concern or non-compliance, and help you implement effective tax planning strategies. They can analyse your practice’s finances, find areas where you can optimise deductions, and make sure you follow all tax regulations, reducing the risk of audits or penalties.

Moreover, having a tax advisor who understands the dental business can offer valuable insights and guidance on practice structuring, retirement planning, and investment strategies that can further decrease your tax rate in the long run.

Although hiring a tax advisor may involve some costs, the potential tax savings and peace of mind they provide can far outweigh the expense. By entrusting your tax planning and compliance to a professional with specialised knowledge of the dental industry, you can focus on what you do best: providing exceptional dental care to your patients, while ensuring that your tax burden is legally minimised.

Read more about our accounts services for dentists, including our 10 vital things to look out for in a dental accountant.

Staying updated on changing tax laws and regulations

As a dental specialist, it’s crucial to stay updated on changes in tax regulations and rules to really reduce your tax rate. Tax laws can change frequently, so it’s essential to be aware of any updates or adjustments that could impact your dental practice. Not following these changes could lead to penalties or missed opportunities to lower your tax bill.

One way to stay current is by regularly consulting with a tax professional who specialises in dental practices. These experts can provide valuable insights and guidance on the latest tax regulations specifically tailored to your profession. They can help you navigate complex tax codes, identify deductions, and make sure you maximise your tax-saving opportunities.

In addition to seeking professional advice, it’s also beneficial to stay informed through reliable sources like government websites, tax publications, and industry associations. These resources often provide updates on tax regulations and rules that may directly affect dentists.

By being proactive and well-informed about changing tax regulations, you can carefully plan your financial decisions, take advantage of available deductions, and ultimately lower your tax rate. Implementing this smart strategy will not only save you money but also ensure that you are in compliance with the law, giving you peace of mind for your dental practice.

We hope you found our blog post about smart ways to lower dentists’ tax bills informative and helpful. Taxes can be a significant expense for dental practices, but with the right strategies, you can legally reduce your tax burden and keep more of your hard-earned money. By following the tips in this article, you can make important financial decisions that will benefit your practice and contribute to its long-term success. Remember, it’s always recommended to consult with a qualified tax professional to ensure compliance with the latest tax regulations and rules.

Action Points

  • Incorporate Your Practice: Consider incorporating your dental practice into a formal business entity like a PC or LLC to manage business expenses more efficiently and enjoy potential tax benefits. This move can streamline the process of identifying and claiming deductible expenses, allow higher pre-tax contributions to retirement savings, and enable you to take advantage of specific business tax breaks and credits. Consult with a tax professional to navigate this process correctly.
  • Implement Tax Planning Strategies: Utilize tax planning strategies to optimize deductions and credits, such as fully leveraging eligible business expenses, maximizing tax credits, timing equipment purchases for tax advantages, and staying informed about tax law changes. Collaborate with financial advisors or accountants to ensure strategic timing and compliance.
  • Hire a Specialized Tax Advisor: Engaging a tax advisor with expertise in dental practices can provide insights into unique tax challenges and opportunities, ensuring compliance and maximizing tax-saving strategies. They can offer tailored advice on structuring your practice, retirement planning, and investment strategies to minimize tax liabilities effectively.
  • Stay Updated on Tax Laws: Keeping abreast of changing tax laws and regulations is crucial for dental specialists to avoid penalties and capitalize on new tax-saving opportunities. Regular consultation with a tax professional, along with self-education through reputable sources, can help you remain compliant and optimize your financial planning.

By incorporating your practice, implementing strategic tax planning, consulting with specialized advisors, and staying informed on tax changes, you can effectively reduce your tax burden and enhance the financial health of your dental practice.

Click here to read our articles Samera.

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

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How Should a Dental Practice Organise its Finances

Dental Business Guide Podcast Episode | 2nd February 2021
George Bellamy and Arun Mehra

Money Matters: Organizing Finances for Dental Practices  

Running a successful dental practice is more than just providing great dental care. It also involves managing money effectively. As a dentist, you need to keep track of your finances to make sure your practice makes a profit. Handling your money isn’t easy, especially when you have to balance taking care of patients and managing the practice’s finances.

In this article, we will talk about some tips and methods to help you organize and handle your finances better. We’ll cover everything from creating a budget and tracking expenses to looking at financial reports and managing your income. We’ll go through all the important steps to help you understand the financial side of your practice and run a successful dental business.  

Action Point

Organizing finances is crucial for running a successful dental practice. This article will provide tips and methods to help dentists manage their finances effectively, including budgeting, expense tracking, financial reporting, and income management, to ensure a profitable dental business.

Read more about the benefits of cloud accounting software.

The importance of organizing finances for dental practices

If you own a dental practice, you’re probably busy with lots of daily tasks like seeing patients, managing staff, and making sure everything runs smoothly. Sometimes, you might forget how important it is to plan your practice’s money.You’re not just the principal dentist, you’re a business owner. Organizing your finances well is highly important for your practice to do well and grow over time.

Being organized with your money helps you understand how your practice is doing financially. You can figure out where you’re making money and make smart decisions that help your practice make more money. It’s like having a strong foundation to manage how much money is coming in, how much is going out, and how to make more.

Also, when your money is organized, it’s easier to follow the rules about taxes and other legal requirements. If you keep good records and clear financial reports, you won’t get in trouble or have problems with mistakes.

Having an organized money system also helps you set goals for your practice, see how well it’s doing, and find ways to make it better. You can make important decisions, like buying new equipment or offering new services, based on what your financial info tells you.

By spending time and effort to organize your money, you can take care of your practice’s financial health and set it up for success in the long run. So, let’s dive in and explore the happy numbers that are waiting for you in the world of organized finances for dental practices.  

Action Point

Organizing finances is essential for dental practice owners. It helps you understand your practice’s financial health, make informed decisions, stay compliant with tax and legal requirements, and set goals for growth and improvement. By dedicating time and effort to financial organization, you can ensure the long-term success of your dental practice.

Contact us to find out more

Setting financial goals for a dental practice

Having clear money goals for your dental practice is really important to make it successful and lasting. When you don’t have clear goals, it’s tough to know how well you’re doing and if you’re improving. When you set money goals, it’s good to think about both short-term and long-term things you want to achieve. Start by looking at what’s happening right now. Check out how much money is coming in, how much is going out, and how much profit you’re making. This helps you understand where you are with money. Also, find out if there are any problems or risks you need to fix.

Next, figure out what you want to achieve with your money in the short term. Maybe you want to make more money, spend less, or earn more profit. Setting clear goals that you can measure and achieve over a certain time (like next month or three months from now) helps you stay on track and motivated. Think about things like getting more patients, how often leads are converted, and how much money each patient brings in. For example, you might want to get 10% more new patients in the next three months or improve how you talk to patients about treatments.

Action Point

Setting financial goals for your dental practice is crucial. Assess your current financial situation, establish short-term and long-term goals, and create a comprehensive financial plan to achieve them. Regular monitoring and adjustments will help ensure the growth and profitability of your practice.

Besides short-term goals, it’s also important to set long-term money goals that match your vision for your dental practice. These goals could be about growing your practice, buying new and better equipment, or making a certain amount of profit in a few years. Remember, your money goals should be realistic and possible to achieve. While it’s good to challenge yourself and aim for growth, setting goals that are too hard might be setting yourself up to fail. Keep checking and changing your goals as your practice gets bigger and things change.

Lastly, it’s super important to make a big plan for your money to help you reach your goals. This plan should cover how you’ll make money, spend money, pay off debts, and invest. Checking your money regularly and making changes when needed helps you stay on track to reach your goals. When you set clear money goals for your dental practice, you build a strong foundation for success. This helps you make smart choices that make your practice grow and make more profit.  

Tracking revenue and expenses effectively  

Keeping a close eye on the money that comes in and goes out is really important for any dental practice that wants to be good at managing their finances. By paying attention to these numbers, you can learn important things about how your practice is doing financially and make smart choices to make more money.

To start with, it’s really important to have a good system for recording and sorting out all the money you get and spend. You can do this using specialist software made for dental practices, or you can work with a professional who knows how dental practices work. Keeping up-to-date financial records means you can make accurate reports that show you how well your practice is doing with money.

When you’re tracking the money that comes in, it’s a good idea to separate it into different parts, like payments from insurance, money from patients, and even income from selling dental products. This helps you see which parts bring in the most money and which parts might need some improvement.

Also, keeping a close watch on all the money you spend is important. Divide your expenses into different categories like supplies, equipment, rent, utilities, and salaries for your staff. This helps you find out if you’re spending too much in some areas and where you might save money.

Checking important financial reports regularly, like statements that show your profit and loss, your financial status, and how money is moving in and out, gives you a good overall view of how well your practice is doing financially. These reports help you see patterns, find any mistakes, and make choices based on facts to make more money.

It’s also a good idea to set financial goals for your practice and keep track of how you’re doing. By setting clear goals, like making more money or spending less on certain things, you can see if you’re doing well and change things if needed. In short, keeping a close watch on the money that comes in and goes out is really important for dental practices to manage their finances well. By using good systems, recording everything correctly, and regularly looking at financial reports, you can learn important things, make smart choices, and work towards reaching your money goals.  

Action Point

Effective tracking of revenue and expenses is crucial for dental practices. Use specialized software or professional help for accurate financial records. Categorize income and expenses to identify trends. Regularly review reports for insights and set financial goals to stay on track.

Implementing a bookkeeping system for accurate financial records  

Setting up a system to keep track of your practice’s money is really important for dental offices. This system helps you record the money you make and spend, and it helps you see how well your practice is doing financially. First, you need to choose the right software to help you with your money. There are different options, from easy-to-use programs online to more advanced ones. Think about how easy it is to use, if it works with your other systems, and if it can grow with your practice.

Once you’ve picked the program, you need to set it up right. Put in all the financial information, like what patients pay and what insurance gives you. Sort your spending into categories like supplies, staff salaries, rent, and advertising. This helps you understand your money better and find areas where you can do better. Updating your money records often is important to keep things accurate. Set aside time every week or month to put in new information, check that your bank statements match, and look at your money reports. This routine helps you have the newest info and make good choices based on real data.

Also, think about connecting your money system with other software you use to manage your practice. This can make your money tasks easier and reduce the chances of making mistakes. For example, connecting your financial system with your patient management software can automatically record patient payments, saving you time and effort.

Lastly, it’s a great idea to talk to a professional accountant or bookkeeper who knows about dental practices. They can help you set up your money system, give you advice on best money practices, and make sure you follow the right tax rules for dental businesses. By setting up a good financial structure, you not only keep accurate money records but also learn important things about how your dental practice is doing financially. This knowledge helps you make smart choices, improve how money comes in, and work towards long-term success.  

Action Point

Implementing an effective bookkeeping system is vital for dental practices. Choose the right software that suits your needs and integrates with other systems. Set up the program with accurate financial data and categorize expenses. Regularly update your records to ensure accuracy. Consider integrating your financial system with other practice management software for efficiency. Consulting a professional accountant or bookkeeper experienced in dental practices can provide valuable guidance. Accurate financial records enable informed decision-making and long-term success.

Understanding and analysing key financial ratios

Knowing and understanding important money ratios is really important for dental practices to keep their business healthy and successful. These ratios help you learn important things about how well your practice is doing with money and how healthy it is overall.

One important ratio to think about is the profit ratio. This ratio helps you see how well your practice is turning its work into profit. You can find it by dividing the profit you make by all the money you get. A high profit ratio means your practice is really good at making profit from the money it gets. But if the ratio is low, it might mean you need to find ways to manage costs better or make more money.

Another important ratio is the liquidity ratio. This ratio helps you know if your practice can easily pay its bills and debts. For example, the current ratio compares the money you have right now to the bills you have to pay soon. If the ratio is more than 1, it means you have enough money to pay your bills. If it’s less, it might mean you could have trouble with money soon.

Also, there’s the debt ratio. This ratio helps you understand how much of your practice’s money is borrowed. It compares how much debt you have to how much stuff you own. If the ratio is high, it means you’re using a lot of borrowed money, which could be risky.

Another ratio to look at is the accounts receivable turnover ratio. This ratio helps you know how quickly your practice is getting paid by patients and insurance. A higher ratio means you’re good at getting paid fast. A lower ratio might mean you have problems with how you collect money.

By understanding and keeping an eye on these important metrics, dental practices can make smart choices to make their money situation better. Regularly looking at these ratios helps practice owners find ways to do better, solve money problems, and make sure their business keeps doing well over time.

Action Points

Understanding key financial ratios is crucial for dental practices. The profit ratio shows how well the practice turns revenue into profit. Liquidity ratios measure the ability to pay short-term bills, with ratios over 1 being good. The debt ratio assesses debt reliance. Accounts receivable turnover indicates payment collection speed. Monitoring these ratios helps make informed financial decisions for long-term success.

Best practices for inventory management in dental practices

Keeping track of and managing the things you use in your dental practice is really important. This includes supplies and equipment. When you manage these things well, it helps your practice be successful. It makes sure you have what you need when you need it, and it also helps you control costs and reduce waste. Here are some good ways to manage your stuff in your dental practice:

Conduct regular audits: Look at your supplies and equipment often to see what you have and if anything is missing or old. This helps you know what you need to order, when you need to order it and what affect that will have on your cash flow.

Categorize and organize: Arrange and put your things in order so it’s easy to find and restock them. Use clear labels and storage solutions to keep everything organized and in good shape.

Set par levels: Decide how much of each thing you should always have based on how often you use them. This helps you avoid running out or even facing a shortage of any items and makes sure you always have enough for your patients.

Establish a reorder process: Make a simple process to order more supplies before you run out. Keep track of what you have and get automatic alerts when things are running low. This helps you avoid last-minute rushes to get more supplies.

Monitor expiration dates: Some dental supplies can expire, and using expired things can be bad for patients and wasteful. Check expiration dates regularly and use things before they go bad.

Utilize technology: Consider using special software or tools that help you manage your supplies. These tools can help you track what you have, make reports, and show you how much you need. They make it easier to manage your supplies.

When you follow these good practices for managing your supplies, it helps your dental practice run smoothly, take better care of patients, and use money wisely. With well-organized and well-managed supplies, you can focus on giving great dental services and make sure you always have what you need for your practice.  

Action Point

Efficient inventory management in dental practices involves regular audits, organization, setting par levels, establishing reorder processes, monitoring expiration dates, and utilizing technology. These practices ensure a well-stocked and organized supply system, promoting smooth operations and quality patient care.

Optimizing insurance billing and claims processing

A big part of making a dental practice successful is making sure insurance billing and claims are done right. Handling the money side of your practice well can lead to more money coming in, less paperwork, and happier patients.

First, it’s important to have a simple and organized system for billing insurance. This means checking if patients are covered by insurance before appointments, coding procedures correctly, and sending claims quickly. This helps you avoid problems with claims and makes sure you get paid properly. Using electronic submission for claims can make this even easier, reducing mistakes and saving time.

Also, it’s crucial to keep learning about the rules and changes in insurance. Regularly updating your knowledge about billing codes and ways to do things right can help you get more money from insurance and avoid problems with following the rules. Using good dental practice software can really help make insurance billing and claims easier. These software tools often have features like sending claims automatically, checking if patients are covered in real-time, and tracking claims. This makes sure you get paid correctly and on time. Also, it’s important to stay in touch with insurance companies. Building good relationships with them can help solve any problems or delays with claims quickly, which is good for your practice and your patients.

Finally, looking at your insurance billing and claims data regularly can help you see how your practice is doing with money. Finding patterns in claim problems, payments that are too low, or claims that were missed can help you fix issues and make sure you’re making enough money. By making insurance billing and claims better, dental practices can have more money, less paperwork, and give patients a smoother experience overall.

Utilizing technology for streamlined financial management  

In today’s digital world, using technology is essential to make money management easier for dental practices. The days of doing everything by hand and using paper records are gone. With the right tools and computer programs, dental practices can make their money tasks much easier, save time and resources, and also be more accurate and efficient.

One of the big parts of money management is keeping track of the money you get and spend. By using accounting software like Xero, dentists can easily record transactions, make money reports, and see how much money is coming in and going out in real-time. This doesn’t just give a good picture of how the practice is doing with money, but it also lets you make quick decisions based on correct and up-to-date information.

Another important technology to think about is digital payment systems. Giving patients the option to pay digitally not only makes things easier for them, but it also makes collecting payments smoother. When you connect online payment systems with the practice’s computer program, you can easily handle payments, keep track of what patients owe, and even remind them to pay. This makes things easier and makes sure payments are made on time. Technology can also help with billing insurance and dealing with claims. By using electronic ways to send claims and keeping track of them, dental practices can reduce paperwork, avoid mistakes, and speed up the process of dealing with claims.

Automatic tools that check if patients are covered by insurance can also help with accurate billing and fewer claim problems. This doesn’t just make the practice’s money situation better, but it also makes patients happier by reducing problems and delays with billing. Additionally, using cloud-based storage and systems to manage documents is a good idea. This helps store and organize money records, invoices, and receipts in a safe and easy way. It gets rid of the need for physical storage and lowers the risk of losing or damaging important documents. With cloud technology, authorized staff members can access financial information from anywhere, making teamwork easier and making sure everyone is on the same page.

To sum it up, using technology is key for dental practices that want to make money management easier. By using computer programs, digital payment systems, electronic claim submission, and cloud-based storage, dental practices can make their money tasks simpler, be more accurate, work more efficiently, and ultimately have more financial success.  

Regular financial reviews and seeking professional advice  

Checking your practice’s money regularly and getting expert advice are really important steps to understand and manage the money side of your dental practice. As a dentist, your main focus is on giving good care to your patients. But knowing how well your practice is doing financially is just as important. Doing regular money check-ups helps you keep a close eye on how much money is coming in and going out. It helps you find any possible problems and make smart choices to make your practice do better financially.

When you look at financial reports, like income statements, balance sheets, and cash flow statements, you learn important things about how much money your practice is making, how much it’s spending, and how well it’s doing overall. While doing your own money check-ups is important, getting advice from a professional like an accountant or financial advisor who knows about dental practices is really helpful. They can look at your money information, find areas where you can do better, and help you make a good plan to make more profit.

Also, a financial advisor can give you useful ideas about taxes, making budgets, and planning for the future. This helps you make smart choices to pay less in taxes, use money better, and be financially secure in the long run. Remember, staying on top of your practice’s money not only makes it financially healthy but also helps you give the best care to your patients. So, make sure you do regular money check-ups and get professional advice to understand and improve your practice’s money situation and find success in your dental practice.  

Handling the money side of a dental practice might seem tough, but with the right plans and steps, you can become great at managing the numbers that make people smile. We talked about things like keeping track of expenses and planning for equipment upgrades, which are important steps to take control of your practice’s money. By using these tips, you’ll make sure your practice is financially stable and ready to grow and succeed. Remember, having a well-organized money system is the key to a healthy smile, both for you and your patients.

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

How to Build a Dental Group

How to Start, Scale and Sell a Dental Group – Webinar

Across the UK an interesting phenomenon is occurring in the UK Dental landscape, more and more dental groups are emerging all in search of quality dental practices to purchase.

They are searching high and low for quality dental practices that will contribute to the group’s EBITDA.

Increasingly, we are hearing from clients stating that their turnover is around £2m and they would like to build over the next few years to sell it for £20m!

Sounds great. However, the key factor some of the groups have not thought about is the debt-level funding they require. If you need to borrow £19m in order to sell it for £20m, I don’t think you would be so inclined to build a dental group.

Click here to listen to our podcast episode on whether now is the time to grow a dental business.

How Easy is it to Build a Dental Group?

It’s Not About How Much You Sell For

The thing you need to really care about is not the total amount group sells for, but ultimately what you actually receive into your bank account after paying off all the debt and taxes.

In other words, if you worked that hard over five years to build your business and sold it for £20m, but only put £1m into your bank account, would it have all been worth it?  Probably not.

In simple terms – it’s the net figure you are interested in, not the headline figure.

This is actually the number you need to start with. So, instead of saying you want to sell your business for £20m, it’s essential to state what you want to receive net of debt and taxes.

Click here to read our guide on How to Sell a Dental Practice.

Contact us to find out more

So how do you plan to achieve your net goal? Is it via acquisition, start-up or a combination of the two?

If you’re going to make acquisitions over the next five years, do you know:

  1. how much revenue on average they should each be generating?
  2. how much you’re going to pay for a typical acquisition?
  3. how many acquisitions you’ll have to make each year?
  4. how much you’ll need each of those practices to grow after you’ve acquired them?

Click here to read more about choosing between starting and buying a dental practice.

Growing The EBITDA Is Essential

If you haven’t really thought about the answers to those questions, in other words: if your business is generating £2m in revenue today at an EBITDA margin of 20% and you want to sell it for a net £5m in five years, you’re probably going to have to grow your business at a rate of around 40% annually.

Is that really achievable in the current market? Especially as there are many more buyers than sellers currently in the UK market for quality dental practices- some of whom are willing to pay over the odds for them?

On exit, the net amount you will receive will ultimately be determined on the EBITDA being generated, and the real key is to grow the EBITDA faster than the revenues of the group. Through margin expansion is where groups can achieve a higher multiple and, hence, a higher valuation on exit.

This will mean centralising many costs as the group scales and keeping a close eye on keeping costs tight, whilst still delivering a quality service.

Click here to read our guide on How to Grow a Dental Practice.

Where Some Dental Groups go Wrong

Buying Multiple Dental Practices – What To Consider

Expanding your current dental practices is not the only way of building a dental group. I have worked with many clients who found that the best option for them was, instead, to buy more dental practices.

The one thing I will say is that this can be a complex process and it’s one which is not always easy to get right. No one wants to put an already successful business at risk, so considering mergers and acquisitions carefully is important.

Click here to read our guide on How to Buy a Dental Practice.

Have The Right Team In Place

No matter how long a dental professional has been in business, they are not best placed to make the most well-informed choices when it comes to legal and financial implications.

It’s important to put a professional team in place, before entering into a deal to buy further practices and merge them with the current one.

The team should include dental solicitors and dental accountants who can make sure that the deal is a solid one, that all relevant information is disclosed and that contracts include all agreed aspects of the deal.

Click here to read about the 10 things to look for in a dental accountant.

How To Ensure A Successful Merger Or Acquisition

There are several tasks that should always be completed, if an acquisition or merger is to be completed successfully and you want to build a dental group.

  • A plan should be created that helps with the purchase of further surgeries and deals with the structure of the business after the acquisition.
  • An analysis should be completed of the services currently being carried out at the surgery that is to be acquired. Is it a good fit in the current plan for the business?
  • A detailed review of the proposition should be drawn up, so that any potential issues can be identified.
  • An implementation plan should be drawn up, so that any acquisition or merger can happen without any significant negative impact on the business as a whole.

Over the years, I have seen the value of this work first-hand, working with clients to ensure that building a dental group is the positive experience that it should be.

Action Plans

  • Evaluate Financial Goals: Focus on the net amount you wish to receive after all debts and taxes, rather than the gross sale price of the dental practice. Plan your financial goals with this net figure in mind.
  • Strategize Growth: Decide whether acquisitions, start-ups, or a combination of both are the best path to achieve your net financial goals. Understand the implications of each approach on your business’s growth.
  • Focus on EBITDA Growth: Prioritize growing your EBITDA faster than your revenues. Implement strategies for margin expansion and cost management to enhance valuation multiples at the time of exit.
  • Plan for Mergers or Acquisitions: Develop a comprehensive strategy that includes the evaluation of potential practices for acquisition, integration plans, service fit analysis, potential issue identification, and implementation planning.
  • Assemble a Professional Team: Before embarking on acquisitions or mergers, gather a team of specialists, including dental solicitors and accountants, to navigate the complexities of legal and financial aspects, ensure thorough due diligence, and secure favorable terms.
  • Conduct Due Diligence: Perform detailed due diligence on potential acquisitions to ensure they fit within your strategic plan and do not pose unforeseen risks to your business.
  • Implement Effective Integration: Develop and follow a clear implementation plan to ensure that any acquired practices or mergers are seamlessly integrated into your business operations, minimizing disruption and maximizing value.
  • Monitor and Adjust Strategy: Regularly review your growth strategy and financial performance, adjusting your approach as necessary to meet your net financial goals and respond to market changes.
  • Evaluate Financial Goals: Focus on the net amount you wish to receive after all debts and taxes, rather than the gross sale price of the dental practice. Plan your financial goals with this net figure in mind.
  • Strategize Growth: Decide whether acquisitions, start-ups, or a combination of both are the best path to achieve your net financial goals. Understand the implications of each approach on your business’s growth.
  • Focus on EBITDA Growth: Prioritize growing your EBITDA faster than your revenues. Implement strategies for margin expansion and cost management to enhance valuation multiples at the time of exit.
  • Plan for Mergers or Acquisitions: Develop a comprehensive strategy that includes the evaluation of potential practices for acquisition, integration plans, service fit analysis, potential issue identification, and implementation planning.
  • Assemble a Professional Team: Before embarking on acquisitions or mergers, gather a team of specialists, including dental solicitors and accountants, to navigate the complexities of legal and financial aspects, ensure thorough due diligence, and secure favorable terms.
  • Conduct Due Diligence: Perform detailed due diligence on potential acquisitions to ensure they fit within your strategic plan and do not pose unforeseen risks to your business.
  • Implement Effective Integration: Develop and follow a clear implementation plan to ensure that any acquired practices or mergers are seamlessly integrated into your business operations, minimizing disruption and maximizing value.
  • Monitor and Adjust Strategy: Regularly review your growth strategy and financial performance, adjusting your approach as necessary to meet your net financial goals and respond to market changes.

Click here to find out more about acquisition finance.

Structuring a Dental Group for Optimal Tax Benefits

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As you may have seen in some of our previous blog posts, the last few years have seen the rise of many dental groups throughout the UK.

With practices across the country facing financial difficulty, we have seen even more dental groups either spring up or continue to grow as practices are snapped up at lower-than-expected prices.

Whether the groups consist of just a couple of practices or even a dozen, dental groups are becoming more common and are growing all the time.

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

Importance of Structuring Your Dental Group

Always start with the end in mind. What do we mean by this? We mean your tax planning needs to fit around and compliment your ultimate goal or plan for your business. And your life!

It is important to note that dental groups come in all shapes and sizes, there is not a one-size-fits-all solution.

One of the problems we’ve seen dental groups making is primarily with how they are structured.

The problem is that many groups simply grow by raising the finance the purchase new practices, surgeries and equipment and they give no thought to how the businesses are structured.

In other words, they haven’t considered the tax consequences of how their group should be structured.

For instance, if you own several dental practices but some are held under your own name, while others are held as limited companies, this can have real consequences to your accounts and tax later on.

This is especially true once you start to grow your group further.

Click here to avail our service on acquisition finance.

Taxes to Consider for Dental Groups

Possible dental group structures

We are often asked ‘am I better off as a sole trader or forming a limited company?’. Unfortunately, the answer is pretty much always ‘it depends’.

It depends on your earnings, your losses, your assets, your personal situation and so much more.

The UK’s tax regulations are not straight forward, what works best for you is often a complex question.

If you want to find out more, we would strongly recommend you get in touch with us.

Most dental groups will fit into one of these 4 categories. However, this is not an exhaustive list by any means.

Structure 1: Sole trader with sub trades.

In this structure, you will typically have a sole trader (the dentist), who owns a number of practices. These practices exist as trades, they are not incorporated entities and they are connected by reference to that own person who is the business owner.

For income tax purposes, all of the practices can exist as one trade. So, if one practice is making a lot of profit, and another is making a loss (perhaps a squat you have just started), you can get loss relief between the practices. You can transfer the losses from the loss-making practice to the profit-making practice.

Business Asset Disposal Relief will also most likely be available, if the criteria are met (more below).

It is also important to note that with an unincorporated business structure, you are taxed on all profits earned, whether or not you draw that money.

Structure 2: Dentist owns practices as limited companies.

In this example, the dentist has incorporated each practice as individual companies and owns 100% of the shares in those companies.

This tends to happen when dentists set up or buy new practices organically, one after the other. But the time will come when you have to ask yourself if it is the correct structure.

One benefit of having limited companies is that it is possible to pay tax at a lower rate on dividends.

However, you will most likely not be able to benefit from loss relief in this structure. If one practice is making a loss you will not be able to use that loss within the other practices.

It doesn’t mean you lose that loss, it is still available for future profits. However, that is not ideal from a cash flow point of view.

Business Asset Disposal Relief will also most likely be available, if the criteria are met (more below).

Structure 3: Dentist owns holding company which owns practices as limited companies.

In this structure, you have an intermediate layer between the dentist and the limited companies (practices), a holding company. The holding company owns 100% of the shares in the dental practices and the dentist owns 100% of the shares in the holding company.

As with structure 2, it may be possible to pay tax at a lower rate on dividends. You will also not be taxed on the profits that you don’t draw.

When structured correctly, this qualifies as a group of companies. Loss relief may therefore be available, since your practices exist as a group of companies.

Substantial shareholding exemption (SSE) is also available if the criteria are met. This means it you may be able to sell one of those practices and pay 0% tax on the shares.

Structure 4: Dentist owns mixed group structure.

In a mixed group structure, you have a holding company which owns some of the practices and the dentist owns some practices separately. These separate practices can either be held as limited companies or as unincorporated entities.

Loss relief is available to practices within the group.

Whether this is the right structure for you will depend on several things. For instance, what you intend to do with the money if you sell one of the practices.

Say you sell one of the practices owned by the holding company. You can sell it for £1million and pay 0% tax on the sale (via SSE), which is then paid into the holding company. However, if you want to draw that money down then it must be distributed as dividend, which will be taxed at a higher rate than Business Asset Disposal Relief (BADF).

So, that might not be the right route for that specific practice.

However, you could sell that practice and keep that money within the group by reinvesting it in one of the other practices within the group. You could also buy another practice, meaning you pay 0% tax and also do not have to pay interest on a bank loan, since you’ve funded it yourself.

Keeping practices outside of the group as separate entities may be right for you if you want to pay the BADF 10% tax, rather than the dividend tax.

Action Plan

  • Evaluate Business Structure: Choose between a sole trader, individual limited companies, a holding company, or a mixed structure based on tax efficiency, loss relief, and sale intentions.
  • Maximize Tax Relief: Use loss relief within your chosen structure to offset profits and losses. Consider the tax implications on dividends and the availability of Business Asset Disposal Relief or Substantial Shareholding Exemption for sales.
  • Strategic Planning for Sales: Decide on the structure that best suits your plans for selling practices, focusing on minimizing tax liabilities and maximizing net proceeds.
  • Consult Experts: Work with dental finance professionals to navigate tax benefits and ensure compliance with your business growth or restructuring.
  • Reinvest Wisely: Reinvest sale proceeds within the group to avoid high taxes on distributions and support business expansion or improvements.

Contact us to find out more

Selling Your Dental Group

One of the reasons that the way your dental group is structured is so important is the price you’ll get when you come to the exit.

After all that hard work building your dental group, you want to make sure you get the best price possible, as well as a clean and smooth break.

A clear structure to your business holdings makes this much easier. Below are examples of the kind of benefits you can get when you structure your dental group correctly.

Business Asset Disposal Relief

When you sell a qualifying business asset you will be taxed at 10% on the gains.

If at some point in the future you want to sell all or part of the business as an unincorporated entity, the following points must apply to qualify for the 10% BADF (previously known as Entrepreneurs’ Relief).

  1. You are a sole trader or business partner.
  2. You have owned the business for at least two years before the date you sell it.

If both of these apply, then the gains will be taxed at 10%.

If you have incorporated your practices into companies and you are selling shares or securities, different criteria must be met.

  1. You have at least 5% of shares and voting rights in the company – if they are not EMI shares.
  2. You are an employee or office holder of the company (or one in the same group).

Substantial shareholding exemption.

This is an exemption which gives UK-based companies exemptions on corporation tax on the gain of the sale of shares, when certain criteria are met.

For at least a continuous 12 month period, beginning no more than 6 years before disposal:

The company disposing of shares must hold an interest of at least 10% of the ordinary share capital of the other company.

The company must be a sole trader or member of a trading group.

The company holding the shares must be a trading company or holding company of a trading group.

With these points in mind, it is easy to see why it is so important to structure your tax affairs with the future in mind.

Consider where you want to be in 5-10 years and then work backwards accordingly.

Restructuring a Dental Group With Samera

If you’re in a situation where your dental group is growing, but needs a little bit more structure, or if you’re thinking about starting your own dental group – we are here to help.

Not only are we experienced business advisors, we are also dental group owners ourselves. We know exactly how to build your dental group so that it is structured in a way that helps you build the most value and get the best price when you sell.

Contact us today to find out more about structuring your dental group.

Our Expert Opinion

“I have been in the fortunate enough position to set up, run and own a dental group. Albeit a little smaller than previously, my experience is built on having done it. Many people think it is easy to borrow money and to then buy and build.

This was certainly true when interest rates were much lower, but now in a higher interest rate environment things are more challenging. The key is to identify the right practice to purchase at the right price, whilst your borrowing costs are managed carefully. Then, the next step is to identify how can you add value to the purchase – what could you do to the practice to improve EBITDA?

Remember –  a small improvement in EBITDA in multiple practices can have a significant effect. But if you buy the wrong practice at the wrong price, this can be a massive problem and, unfortunately, I have seen this on many occasions, where a group has purchased a few lemons, which has had a significant impact on the wider group, making it less attractive to any potential group buyers down the line.

Currently, the valuations in the market are lower than what they have been in the past, but for the savvy buyer, now is a great time to build a group. Get in touch if you need help!”

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

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Expert accounting tax and payroll services

It’s not just patient treatment and care that play a major role in the success of a dental practice, which is why retaining knowledgeable and high-performing dental professionals and reception staff is not the only consideration for a surgery owner when it comes to getting the job done.

There are roles that need to be fulfilled that are essential to the success and growth of any dental surgery. These roles involve dental accountancy and tax. Over the years, our team has helped numerous dental professionals with their accountancy and tax requirements, both individual and for practices and groups.

Click here to read our articles Samera.

The importance of professional dental accountancy and book-keeping

Professionally managed accounts are an asset to any dental practice owner who is looking to scale their practice. Having this service in place means that the performance of the practice is transparent. This makes it a lot easier to make any necessary adjustments to performance, to make certain of as smooth a growth and expansion process as possible.

I have worked with both private and NHS clients to ensure all accountancy aspects of their business were run smoothly. The result was that they were able to concentrate on providing excellent care and treatment, while I made sure that secure financial foundations and processes where in place, in order to aid growth.

Professional help with book-keeping and payroll is just as important. Working with software such as Xero and Quickbooks is a skill and it often makes more sense to outsource this work. Leaving accounting and book-keeping to professionals means that the surgery team can concentrate on the day to day running of the business, safe in the knowledge that the business accounts are being monitored and maintained and that any issues can immediately be identified.

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

The importance of professional tax advice

Saving tax while complying with regulations is something that every dental professional and practice can benefit from. A professional dental accountant can help with tax savings which releases more cash to invest in the expansion of the practice.

Having a tax expert on the side means that the surgery can grow at the same time as being fully tax compliant. It’s a win-win situation.

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

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.

Determining the value of a dental practice

Understanding the Value of Your Dental Practice: A Comprehensive Guide

Accurate valuation of a dental practice is vital for both sellers and buyers to get a fair price. Whether selling, planning retirement, or exploring expansion, understanding your dental business’s true value is crucial to making the right decision.

This guide explores the complex process of valuing a dental practice, highlighting key factors affecting its worth. One pivotal metric is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

The Importance of an Accurate Valuation

A dental practice’s value goes beyond financial figures, encompassing goodwill, patient relationships, community reputation, and overall operational efficiency. Accurate valuation considers tangible and intangible assets, providing a complete view of the practice’s true worth.

For sellers, accurate valuation ensures a fair market price, acknowledging years of hard work and investment. Buyers benefit by gaining a clear investment picture, aiding strategic decisions and future planning. Getting help from a specialist dental sales agent, such as Samera, is always a good idea.

The importance of Competitive Pricing

There is great demand for all types of dental practice in the UK, so it’s certainly possible to sell profitably. However, it’s important that a practice is not over-valued, restricting opportunities for sale. Buyers are often looking for a practice that they can buy with a view to add value and to re-sale at a profit in the future. This means that they do not want to overspend.

The sale price of a practice should always be based on transparent figures and evidence. The price has to be supported by the value that the practice represents.

It’s easy to adjust an EBITDA upwards, to try and demand a higher selling price, but this tends to simply lead to a bad reputation for the seller. I know I have ensured that several clients have embraced competitive pricing over the years, making completing a sale a lot simpler and quicker for them.

Click here to read our article on How to Sell Your Dental Practice in 9 Steps

Understanding EBITDA in Dental Practice Valuation

EBITDA, a key financial metric in dental practice valuation, represents earnings before interest, taxes, depreciation, and amortization. This metric offers a snapshot of operational performance, excluding non-operational expenses, providing a clear view of income generation from core operations.

Understanding EBITDA involves assessing profitability from a cash flow perspective, excluding non-cash expenses. In dental practice valuation, EBITDA serves as a benchmark, allowing buyers and sellers to negotiate a fair price reflecting the true earning potential.

In subsequent sections, we look at factors influencing dental practice valuation, various valuation methods, and EBITDA’s role in assessing overall worth.

Calculating EBITDA:

EBITDA is calculated by starting with a practice’s net income and adding back interest, taxes, depreciation, and amortization. The formula is represented as follows:

EBITDA=NetIncome+Interest+Taxes+Depreciation+Amortization

There is more detailed information available to read, but I am going to cover the basics here.

Significance of EBITDA in Dental Practice Valuation:

  1. Operational Performance Assessment:

EBITDA offers a clear snapshot of a dental practice’s ability to generate income from its core operations. By excluding non-operational expenses, it provides insight into the practice’s day-to-day profitability.

  1. Comparison to Industry Standards:

EBITDA serves as a benchmark for evaluating a dental practice’s financial health in comparison to industry standards. This comparative analysis aids in determining how well the practice is performing relative to other practices

  1. Simplified Financial View:

As a standardized metric, EBITDA simplifies the financial picture of a dental practice. It allows buyers, sellers, and investors to focus on the practice’s core earning capacity without being influenced by non-cash items or one-time expenses.

Factors Considered in EBITDA Calculation:

  1. Net Income:

The starting point for EBITDA calculation is the practice’s net income, which includes all revenues and expenses.

  1. Interest:

EBITDA adds back interest expenses to provide a clearer view of the practice’s operational performance without the impact of financing costs.

  1. Taxes:

Tax expenses are added back to eliminate their influence on the EBITDA calculation, allowing for a pre-tax assessment of earnings.

  1. Depreciation and Amortization:

EBITDA adds back depreciation and amortization to the net income, as these are non-cash expenses that don’t directly affect the practice’s cash flow.

In the context of dental practice valuation, EBITDA is a valuable tool for negotiating a fair market price. Buyers can use it to assess the practice’s profitability, while sellers can highlight the true earning potential of their business. However, it’s essential to consider EBITDA in conjunction with other factors and valuation methods to arrive at a comprehensive understanding of a dental practice’s overall value.

Factors Influencing Dental Practice Value:

  1. Historical Financial Performance (Last Three Years):

The past financial performance of a dental practice is a significant factor in valuation. Examining revenue trends, profit margins, and stability over the last three years provides insights into the practice’s historical success and financial health. Consistent growth and profitability enhance the perceived value of the practice.

Impact on Valuation:

Positive financial performance may result in a higher valuation, reflecting the practice’s    track record of success. Conversely, declining performance may prompt a more conservative valuation, considering potential risks.

  1. Potential for Growth and Expansion:

The potential for future growth and expansion is a critical factor in dental practice valuation. This includes the ability to attract new patients, introduce new services, or expand the existing patient base.

Impact on Valuation: 

Practices with a demonstrated growth potential are often valued higher. Investors and buyers are willing to pay a premium for practices positioned for expansion, anticipating increased future earnings.

  1. Type of NHS Contracts (PDS vs. GDS):

The nature of National Health Service (NHS) contracts, specifically Personal Dental Services (PDS) and General Dental Services (GDS), significantly influences valuation. PDS contracts often involve more flexibility in service provision and remuneration.

Impact on Valuation:

Practices with PDS contracts may be perceived as more adaptable and potentially less dependent on fee-for-service models. This flexibility can positively influence valuation, as it aligns with evolving trends in dental service delivery.

  1. Location and Local Market Conditions:

The geographical location of a dental practice and the prevailing local market conditions play a crucial role in its value. Factors such as population density, demographic trends, and competition within the local market are considered.

Impact on Valuation:

Practices situated in high-demand areas with a growing population may command higher valuations. Conversely, practices facing intense competition or located in areas with declining populations may experience lower valuations.

In Summary:

  • Positive Historical Financial Performance: Enhances valuation by demonstrating a track record of success and financial stability.
  • Potential for Growth and Expansion: Practices positioned for future growth are often valued higher, reflecting anticipated increased earnings.
  • Type of NHS Contracts: The flexibility associated with PDS contracts may positively impact valuation by aligning with evolving trends in dental service delivery.
  • Location and Local Market Conditions: Geographical factors and local market dynamics significantly influence valuation, with practices in high-demand areas often commanding higher values.

Understanding these factors and their interplay is essential for both buyers and sellers in the dental practice market. A comprehensive evaluation, considering historical performance, growth potential, contract types, and local conditions, ensures a more accurate and informed assessment of a dental practice’s value.

Competitive Pricing and Market Demand in Dental Practice Sales:

  1. Role of Competitive Pricing:

Competitive pricing plays a pivotal role in the successful sale of dental practices. Sellers must strategically set prices that align with market expectations, considering factors such as location, practice size, patient base, and overall financial performance.

Impact on Sale Success:

Well-priced dental practices attract more interest from potential buyers, facilitating a quicker and more successful sale. Overpricing can deter buyers, while under pricing may undervalue the practice.

  1. Current Market Trends and Buyer Expectations in the UK Dental Industry:

In the UK dental industry, current trends and buyer expectations shape the dynamics of practice sales. Buyers often seek practices with modern facilities, established patient bases, and growth potential. Market trends include an increasing emphasis on preventive and cosmetic dentistry, as well as a preference for flexible NHS contract arrangements.

Impact on Sale Strategy:

Sellers who align their practices with these trends and buyer preferences are more likely to attract interested parties. Understanding the market landscape ensures that sellers can position their practices competitively and meet buyer expectations.

  1. Case Studies or Examples of Recent Dental Practice Sales:

Recent dental practice sales can offer valuable insights into market dynamics and successful sale strategies. For instance, a practice that effectively showcased its advanced technology, strong patient relationships, and growth opportunities may have commanded a higher price.

Impact on Future Sales:

Analysing case studies allows sellers to learn from successful transactions and adapt their approach accordingly. It provides real-world examples of how market trends and competitive pricing influence the outcome of dental practice sales.

Note: Specific case studies would need to be sourced from recent industry reports, publications, or professional networks.

In Summary:

  • Competitive Pricing: Crucial for attracting buyers and ensuring a successful sale, competitive pricing involves strategic alignment with market expectations.
  • Market Trends and Buyer Expectations: Understanding current trends and buyer preferences in the UK dental industry is essential for positioning practices competitively and meeting buyer expectations.
  • Case Studies or Examples: Learning from recent dental practice sales through case studies provides practical insights into successful strategies and their impact on sale outcomes.

By incorporating competitive pricing strategies, staying informed about market trends, and drawing lessons from case studies, sellers can enhance their chances of a successful and lucrative sale in the dynamic UK dental industry.

EBITDA Multiples and Sector Comparisons:

Upon calculating a figure of EBITDA, valuers apply a multiple to EBITDA to yield a value for the business.

Every sector multiple varies, which is really dependent on the demand for businesses in such sectors.

For instance, in the tech sector, we see very high multiples applied to EBITDA, whilst in Dentistry we see multiples ranging from 6-7x for single businesses and usually a higher multiple for larger dental groups.

  1. Application of EBITDA Multiples:

EBITDA multiples are a common valuation method that involves applying a multiplier to a company’s Earnings Before Interest, Taxes, Depreciation, and Amortization. The resulting figure represents an estimate of the business’s overall value. This method is particularly relevant in industries where operational performance is a key indicator of value.

  1. Comparison of EBITDA Multiples in Dentistry vs. Technology:

In the context of dentistry and technology sectors, EBITDA multiples can vary significantly due to the distinct characteristics of each industry. Technology companies often command higher multiples, reflecting their potential for rapid growth, innovation, and scalability. On the other hand, dental practices, being service-oriented and less scalable, may have comparatively lower multiples.

  1. Rationale Behind Differences in EBITDA Multiples:

Growth Prospects:

Technology companies are often characterized by high growth potential, global reach, and scalability. Investors are willing to pay higher multiples for these businesses, anticipating substantial future earnings. In contrast, dental practices, being local and service-based, may have limited scalability, impacting their growth potential and, consequently, their multiples.

Industry Risk and Stability:

The technology sector is known for its innovation and dynamism, but it also comes with higher inherent risks. Investors may demand higher returns for navigating the uncertainties in technology, leading to elevated EBITDA multiples. Dental practices, as stable service providers with a more predictable patient base, may attract more conservative multiples.

Market Size and Competition:

The technology sector often operates in expansive global markets with significant revenue potential. Higher competition and broader market opportunities can contribute to increased EBITDA multiples. In contrast, the dental industry, while essential, may have more localized markets and lower revenue potential, influencing the multiples assigned to practices.

Operational Characteristics:

The nature of operations in each sector influences EBITDA multiples. Technology companies, especially software-based ones, may benefit from higher profit margins and lower operational costs once the product is developed. Dental practices, being service-oriented, may have higher operational costs and lower margins, affecting their multiples.

In Summary:

  • EBITDA Multiples Application: EBITDA multiples are applied by multiplying a company’s EBITDA by a factor to estimate its overall value, commonly used in industries where operational performance is a key indicator.
  • Comparison of Sectors: Technology sectors often command higher EBITDA multiples than dentistry due to factors such as growth prospects, industry risk, market size, competition, and operational characteristics.
  • Rationale for Differences: Differences in EBITDA multiples arise from varying growth potential, risk levels, market dynamics, and operational characteristics inherent in different industries. Investors assess these factors when determining the appropriate multiples for valuation.

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Did You Know?


  • The intangible assets of a practice, such as its reputation, patient loyalty, and staff expertise, contribute to its goodwill value. Goodwill can account for a significant portion of the final sale price, especially for well-established practices with a strong brand. (Source: https://samera.co.uk/samera-calculators/)
  • Dental practice values can be affected by the overall economic climate and dentistry industry trends. Increased demand for dental services due to population growth or changes in NHS funding can lead to higher valuations. (Source: https://www.ft-associates.com/practice-value-index-all/)

The Valuation Process: A Step-by-Step Guide by Samera

  1. Initiation and Documentation Gathering:

The valuation process begins with an initial consultation where Samera gathers comprehensive financial documentation from the dental practice. This includes but is not limited to financial statements, tax returns, profit and loss statements, and balance sheets. Accurate and detailed financial data forms the foundation for a thorough valuation.

  1. Introduction to the Valuation Team:

Clients are introduced to the valuation team at Samera, ensuring transparency and a clear understanding of the professionals involved in the process. The team typically includes financial analysts, valuation experts, and industry specialists.

  1. Client Questionnaire:

Clients are provided with a detailed questionnaire designed to extract key information about the practice. This questionnaire covers various aspects such as practice history, patient demographics, staff composition, operational processes, and growth strategies. Client input is crucial for understanding the unique characteristics of the dental practice.

  1. Initial Consultation:

An initial consultation is conducted to discuss the client’s goals, expectations, and any specific considerations related to the valuation. This meeting allows the valuation team to gain insights into the practice’s strengths, challenges, and future plans, further refining the valuation approach.

  1. Financial Analysis and Benchmarking:

Samera conducts a thorough financial analysis, including benchmarking against industry standards. This step involves comparing the practice’s financial performance to key performance indicators in the dental industry, providing context for the valuation.

  1. Application of Valuation Methods:

Various valuation methods, including EBITDA multiples, discounted cash flow (DCF), and comparable sales analysis, are applied based on the nature of the dental practice and industry standards. Each method contributes to a comprehensive assessment of the practice’s value.

  1. In-Person Practice Assessment (if applicable):

Depending on the nature of the valuation, an in-person assessment of the practice may be conducted. This involves a physical examination of the facilities, equipment, and an evaluation of the overall operational environment.

  1. Drafting the Valuation Report:

A detailed valuation report is drafted, presenting the findings, methodologies employed, and the determined value of the dental practice. This report serves as a comprehensive document for clients, providing transparency into the valuation process and its outcomes.

  1. Consultation and Review:

Samera engages in a final consultation with the client to review the valuation report, address any questions or concerns, and provide additional insights. This interactive process ensures that clients fully understand the factors contributing to the determined value.

  1. Delivery of the Valuation Report:

The finalized valuation report is delivered to the client. This report serves as a valuable tool for clients in negotiations, decision-making, and strategic planning related to their dental practice.

In Summary:

  • Comprehensive Financial Documentation: The valuation process begins with the gathering of detailed financial documentation, forming the basis for a thorough assessment.
  • Client Involvement through Questionnaires and Consultations: Client input is solicited through questionnaires and consultations, ensuring a personalized understanding of the dental practice’s unique characteristics.
  • Application of Multiple Valuation Methods: Various valuation methods are applied, including financial analysis, benchmarking, in-person assessments, and the application of industry-standard methodologies.
  • Transparent Reporting and Consultation: Samera emphasizes transparency by delivering a detailed valuation report and engaging in consultations to ensure clients are well-informed and confident in the valuation outcomes.

Additional Considerations in Valuation:

  1. Adjustments to EBITDA:

During the valuation process, it’s essential to consider adjustments to EBITDA to present a more accurate picture of the dental practice’s sustainable earnings. This may involve accounting for one-time expenses, such as legal fees or restructuring costs, which may not be reflective of the practice’s ongoing operations. Additionally, adjustments for future savings or cost-cutting measures that are imminent can be factored in.

Impact on Valuation:

Making appropriate adjustments ensures that the valuation is based on the normalized, sustainable earnings potential of the dental practice. This allows both buyers and sellers to evaluate the business on its core operational performance without being unduly influenced by exceptional or non-recurring items.

  1. Non-Operational Expenses:

Non-operational expenses, such as interest on loans or non-business-related travel expenses, should be carefully considered in the valuation. These costs don’t contribute to the day-to-day operations and profitability of the dental practice.

Impact on Valuation:

Adjusting for non-operational expenses provides a clearer view of the practice’s operational efficiency and profitability. By focusing on core operational earnings, the valuation becomes more accurate and aligned with the practice’s true value.

  1. Owner-Specific Costs:

Valuation should account for any owner-specific costs that may not be applicable under new ownership. This could include owner perks, discretionary spending, or personal expenses that are not essential for the practice’s operations.

Impact on Valuation:

Isolating owner-specific costs ensures that the valuation reflects the true financial health of the dental practice, independent of individual owner preferences or spending habits. This adjustment contributes to a more objective assessment of the business’s value.

  1. Normalisation of Financial Statements:

Normalising financial statements involves adjusting historical financial data to eliminate irregularities, one-time events, or non-recurring expenses. This process creates a more standardized and representative financial picture for valuation purposes.

Impact on Valuation:

Normalizing financial statements allows for a more accurate assessment of the practice’s consistent earning capacity. It facilitates a better understanding of the practice’s financial performance over time, helping buyers and sellers make informed decisions.

In Summary:

  • Adjustments to EBITDA: Consideration of adjustments to EBITDA, including one-time expenses and future savings, ensures a valuation based on sustainable earnings.
  • Non-Operational Expenses: Accounting for non-operational expenses provides a more accurate representation of the dental practice’s operational efficiency and profitability.
  • Owner-Specific Costs: Recognizing and adjusting for owner-specific costs ensures that the valuation is objective and reflects the business’s inherent value, independent of individual owner preferences.
  • Normalization of Financial Statements: The normalization of financial statements contributes to a standardized and representative financial picture, aiding in the assessment of the practice’s consistent earning capacity.

Selling Your Dental Practice: Tips and Strategies

Best Practices for Preparing Your Practice for Sale

  • Organize Financial Documentation:

    Ensure that your financial records, including profit and loss statements, tax returns, and other relevant documents, are well-organized and up-to-date. A clear financial history is crucial for potential buyers.
  • Enhance Operational Efficiency:

    Streamline your practice’s operations to showcase efficiency. This may involve optimizing staff workflows, updating technology, and addressing any outstanding operational issues.
  • Address Regulatory Compliance:

    Ensure that your practice adheres to all regulatory requirements. Compliance with healthcare regulations and standards is a key factor that can influence a buyer’s decision.
  • Build a Strong Patient Base:
    Work on patient retention strategies and maintain a strong relationship with your existing patient base. A loyal and satisfied patient population can significantly enhance the appeal of your practice.

Presenting Your Practice Attractively to Potential Buyers

  • Highlight Growth Potential:

    Emphasize the growth opportunities your practice offers. This may include the potential for expanding services, attracting new patients, or participating in emerging healthcare trends.
  • Showcase Technology and Infrastructure:

    Showcase any modern technology, equipment, or infrastructure upgrades your practice has undergone. Highlighting a state-of-the-art facility can make your practice more appealing to buyers.
  • Demonstrate Community Engagement:

    Showcase your practice’s involvement in the community. Positive community relationships and engagement can contribute to the overall attractiveness of the practice.
  • Transparently Communicate Financial Performance:

    Clearly communicate your practice’s financial performance, emphasizing stable revenue streams and profitability. Transparency builds trust with potential buyers.

Role of Professional Valuation and Sales Agents

  • Professional Valuation:

    Engage a professional valuation firm to assess the fair market value of your practice. A comprehensive valuation considers both tangible and intangible assets, providing an objective basis for pricing.
  • Benefits of Sales Agents:
    Utilize the services of experienced sales agents who specialize in dental practice transactions. These professionals can navigate the complexities of the sales process, identify potential buyers, and negotiate on your behalf.
  • Market Expertise:

    Leverage the market expertise of valuation and sales professionals to understand current industry trends, competitive landscapes, and buyer expectations. This insight can inform your sales strategy.
  • Negotiation and Closing Support:

    Professional sales agents play a crucial role in negotiation and closing. Their experience can help secure a favourable deal and ensure a smooth transition for both parties.

Timing the Sale

Consider the timing of your sale strategically. Market conditions, the overall economy, and personal factors may influence the optimal time to sell. Being aware of these considerations can maximize the value of your practice.

In Summary:

  • Preparation for Sale: Organize financial records, enhance operational efficiency, address compliance, and build a strong patient base.
  • Attractive Presentation: Highlight growth potential, showcase technology and infrastructure, demonstrate community engagement, and transparently communicate financial performance.
  • Professional Valuation and Sales Agents: Engage professional valuation services for accurate pricing and utilize experienced sales agents to navigate the sales process, identify potential buyers, and facilitate negotiations.
  • Timing Considerations: Strategically time the sale, considering market conditions, the economy, and personal factors.

Leveraging Digital Tools for Enhanced Valuation

Digital Platforms for Efficient Financial Management:

Digital platforms and tools are reshaping the way financial management is approached within dental practices. From streamlined accounting systems to advanced analytics tools, the integration of digital solutions has become instrumental in enhancing efficiency, accuracy, and overall operational effectiveness. This transformation sets the stage for a more comprehensive and data-driven approach to dental practice valuation.

The Impact of Technology on the Valuation and Sale Process

  1. Automated Financial Tracking:

Digital tools enable automated financial tracking, offering real-time insights into revenue, expenses, and key performance indicators. This not only ensures accuracy in financial reporting but also provides a dynamic foundation for a more precise valuation process.

  1. Data Analytics for Informed Decision-Making:

Advanced data analytics tools empower dental practitioners to extract meaningful insights from extensive datasets. These insights aid in identifying trends, predicting future performance, and making informed decisions throughout the valuation and sales process, leading to more strategic outcomes.

  1. Cloud-Based Financial Platforms:

Cloud-based financial platforms provide accessibility and collaboration, allowing stakeholders involved in the valuation process to securely access financial data from anywhere. This facilitates transparency and seamless communication, contributing to a more efficient workflow.

  1. Enhanced Communication and Collaboration:

Digital communication tools and collaborative platforms simplify interactions between buyers, sellers, and valuation professionals. From financial report discussions to negotiations, these tools foster efficient communication, ensuring that all parties involved are on the same page.

  1. Secure Data Management:

Cybersecurity measures embedded in digital financial management platforms ensure the secure handling of sensitive financial data. This is paramount in maintaining the confidentiality and integrity of information throughout the valuation and sales processes.

  1. Virtual Due Diligence:

Technology enables virtual due diligence, allowing potential buyers to assess a dental practice remotely. Through digital documentation, virtual tours, and online meetings, the due diligence phase becomes more efficient, reducing the time and resources traditionally associated with this crucial process.

  1. Facilitation of Online Transactions:

Digital tools facilitate online transactions and document signing, diminishing the reliance on physical paperwork. This not only accelerates the sales process but aligns with the modern, tech-driven expectations of both buyers and sellers.

In conclusion, the integration of digital tools into financial management practices is revolutionizing the valuation and sale processes for dental practices. This digital transformation not only improves efficiency but also enhances the accuracy and transparency of the entire transaction. As technology continues to advance, leveraging these tools becomes a strategic imperative for dental practitioners looking to optimize their valuation and sales outcomes.

How does Samera Value a Dental Practice?

If you want to value a dental practice, it’s important to understand that every dental practice is unique. They also have a range of values, from lower to higher values, which is determined by the financial accounts.

This is why we always ask for at least the last 3 years of the practice’s accounts and the most up-to-date management accounts.

To go alongside these documents, we created a comprehensive and time-effective questionnaire. We use this, as well as discussions with the business owners and managers, to determine the financial worth and potential of the practice.

We then create a valuation report, allowing us to understand the correct market value of the business. If you want to find out more about dental practice valuations, please get in touch.

Conclusion

In the dynamic landscape of the healthcare industry, staying informed, leveraging technology, and relying on professional expertise are essential elements for a successful and lucrative transition. Whether you are a seller looking to maximize the value of your practice or a buyer seeking a strategic investment, the collaboration with professionals ensures that you navigate the process with confidence and make well-informed decisions for the future.

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

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