Martin Woodrow outlines how the 2020 budget is likely to affect you and the progress made on NHS pensions.
There’s a lot in Budget 2020 that affects dentists. Some progress has been made on pensions for NHS dentists. Business interruption loans are also good to see, as is funding for Coronavirus sick pay. But there has been little movement on important public health concerns.
Pensions tax changes for NHS dentists
The Chancellor has announced changes to the annual allowances, which affect NHS dentists’ pensions. I’m delighted to see movement on this, as we’ve campaigned hard for
pensions tax reform.
- Dentists earning below £200,000 will no longer be affected by the tapered annual allowance. The annual allowance will only begin to taper down for individuals who also have an “adjusted income” above £240,000.
- The minimum level to which the annual allowance can taper down, will reduce from £10,000 to £4,000 from April 2020. This reduction will affect dentists with total income (including pension accrual) over £300,000.
- The lifetime allowance will also increase to £1,073,100 this year, increasing the maximum amount an NHS dentist can accrue in a tax-efficient manner over their working life.
This is good news for dentists and the NHS. Many dentists will no longer have to cut clinical hours, to avoid breaching their annual allowances. However, it is not a cure-all. We will continue to call for flexibilities within the NHS Pension Scheme to help those who are still subject to pensions tax charges.
The Chancellor has pledged to offer “whatever it takes” to support NHS services responding to the COVID-19 outbreak. This includes a £5bn emergency response fund. So far, we know that:
Small firms will have access to business interruption loans of up to £1.2m. This is particularly good news for dental practice owners worried about the impact of COVID-19. However, the details remain unclear and government officials have not yet answered our calls for clarification
Deferred tax payments may also be agreed with HMRC, if you are in financial difficulty
Statutory sick pay will be paid to all those who are advised to self-isolate, even if they don't have symptoms
Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks, though the details of how these refunds will be made are unclear
Benefits will also be quicker and easier to access for self-employed. Contributory employment and support allowance (ESA) will be claimable from day one, rather than day eight. The minimum income floor for universal credit will be removed. The requirement to physically attend a job centre will be removed – everything can be done on the phone and online.
When deciding how you and your practice will respond to the Coronavirus outbreak, I advise you to review the government’s
guidance on COVID-19 and the dental practice.
Tax and National Insurance changes
In this budget, the National Insurance Contributions tax threshold has risen from £8,632 to £9,500. This will save you just over £100 a year. But this will not bridge the gap caused by years of below-inflation pay uplifts for NHS dentists. That’s why, we’ll continue to
campaign for fairer pay for dentists.
In other tax news, the Chancellor reiterated plans to change IR35 regulations. NHS dental practices are already required to pay extra tax, if they are engaging someone though a limited company, but they are found to be working as an employee. From April 2020, IR35 rules will also apply to
larger private practices.
Corporation tax will remain at 19% this year. But there are changes elsewhere. Employment allowance will increase from £3000 to £4000. And, the National minimum wage to rise by 6.2% from £8.21 to £8.72. Check in with your accountant or financial advisor about how these changes may affect you.
Missed opportunities in public health
With coronavirus dominating the health agenda, other issues have fallen by the wayside. The Chancellor has pledged an extra £6bn on the NHS, but nothing we can realistically expect to benefit this service. Yes, cigarette duty is up, but alcohol rates are frozen and, despite rumours, there were no moves to expand the sugar levy.
It’s a shame to see such crucial issues get subsumed by this crisis, but we will continue to campaign for prevention and the nation’s oral health.
CEO British Dental Association
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