Collect unlimited free verifiable CPD for UK Dentists here >>> https://www.dentistswhoinvest.com/video/1
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Navigating the seismic shift in UK tax reporting that is about to impact dental professionals across the country. Making Tax Digital (MTD) represents one of the most significant changes to self-assessment in decades, yet many dentists remain unaware of what is coming or how it will affect their practice finances.
From April 2026, self-employed dental professionals with income exceeding £50,000 will need to abandon paper records and begin making quarterly digital submissions to HMRC through compatible software platforms. But the devil truly is in the details. While some practitioners will be immediately captured by these new requirements, those operating through limited companies may find themselves temporarily shielded, provided they do not have significant additional income streams.
We break down exactly who will be affected and when, explaining how the threshold will progressively decrease from £50,000 in 2026 to £30,000 in 2027 and eventually £20,000 in 2028. The distinction between different income sources proves critical, with dividends notably excluded from threshold calculations while property income must be counted alongside self-employed earnings. For those with multiple income streams, the administrative burden increases substantially, potentially requiring eight separate quarterly submissions annually rather than the current single return.
Practical preparation steps are essential, from establishing dedicated business bank accounts to exploring MTD compatible software solutions. Despite the challenges, there are potential benefits too, including more regular visibility of your financial position and tax liabilities throughout the year. Whether this affects you immediately or in subsequent years as thresholds decrease, understanding these changes now will prevent unnecessary stress as implementation deadlines approach.
Click the link in our description to access the free verifiable CPD associated with this episode. Complete the questionnaire, add your reflections, and we will email your certificate to contribute to your CPD hours for this learning cycle.
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Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dr James (00:00):
We need to do a podcast on this topic because
this is happening super soon anda lot of dentists A don't even
know what it is because theyhaven't heard of it, or, b they
know a little bit about it, butthey could know more, so let's
address that today.
I'm also happy to share thatthere is free verifiable CPD
associated with this podcastepisode.
Whenever you've finished theepisode, all you have to do is
(00:21):
click the link in the podcastdescription.
It'll take you right throughthe dentistry invest website.
You'll be able to complete ashort questionnaire and, once
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable CPD certificate,
which is entirely free.
What that means is this podcastepisode will be able to
contribute towards yourverifiable CPD hours during this
(00:43):
learning cycle.
Making tax digital.
What is that, Amman?
Amman (00:53):
Yes.
So essentially, James, it's anew structure to the
self-assessment process.
So the old structure was youwould have your personal tax
year between April to the end ofMarch.
You would then have 10 monthsfor you or your accountant to
submit your tax return.
So obviously there's quite achunky period of time there for
(01:13):
you to kind of get your taxes inorder and make that payment.
Now it's changing completely.
It's basically based on thesethree key principles.
So firstly, it's beendigitalized, so there's no more
paper records.
So each dentist will need tomake sure that they have a
(01:36):
software in place so that theycan submit to HMRC.
So that software needs to becompatible for making tax
digital, which essentially meansthat you will connect your bank
account to a software likeaccounting like zero, sorry and
you will then need to startsubmitting on a more regular
basis.
(01:56):
So essentially, what hmrc wantto do is they want you to start
submitting on a quarterly basisinstead of at the end of the
year which is obviously quite abig change for self-employed
individuals, right, I see.
Dr James (02:18):
So just to make this super duper clear, it's a little
bit like zero, or we need somesoftware that's similar-ish to
zero and basically every dentistneeds to have it that's right.
Amman (02:24):
Yeah, so it will be similar to zero.
Zero will have their ownproduct quickbooks will have
their own product.
There'll be a number ofproducts on the, on the platform
, on the on the market for youto purchase.
Essentially, you can also dothis on a spreadsheet too.
However, you need to ensure youhave some kind of bridging
software so that you can makethose quarterly submissions.
Dr James (02:47):
Understood and if I've gathered this correctly, you
will have all the data at yourside in your Xero or whichever
software that you choose, butyou still have to send them to
your accountant as a middleman.
Have I got that right?
Amman (03:06):
man, have I got that right?
That's right.
Ultimately, you can as with thecurrent process, you can submit
your own self-assessment, butobviously, if you want to make
sure that you've got a charteredaccountant looking across it
and all the tax figures arecorrect and there's no
additional expenses or taxesthat you're missing out on, then
it's always best to doublecheck with an accountant.
Dr James (03:23):
I see.
All right.
Well, just to really spell thisout in terms of who this
affects it's not just dentists,is it all self-employed people?
Is that how it works?
Amman (03:34):
Yes, so essentially, if you, it's based on thresholds.
So this is going to be phasedin from April 2026 and the first
year will be based on whetheryou're self-employed and or
property income will be over£50,000.
To 2025 tax return, which isdue at the end of this January,
(04:11):
if that shows self-employed andor property income over 50,000,
you will then have to complywith making tax additional from
April 2026.
Dr James (04:18):
Right.
This is so useful to know.
Amman (04:20):
Yes, so obviously most dentists who are self-employed
will be impacted by this.
That threshold is going toreduce year on year for the next
, for the two years following2026.
So it will go down from 50k to30k to 20k.
So it's fair to say themajority of dentists will be
(04:42):
impacted by this over the nextone to two years.
Dr James (04:45):
So it is coming, it's happening and you know, when you
said that 50k threshold just asecond ago, does that mean that
dentists who are trading as alimited company and keeping a
lot of their earnings within thelimited company but potentially
taking out under 50k everysingle year, will they still be
affected in the first year?
Amman (05:06):
Good question taking out under 50k every single year,
will they still be affected inthe first year?
Good question.
So actually, even if they wereto be taking out more than 50k,
dentists within limitedcompanies are very unlikely, in
this pure scenario, to beaffected by this, because the 50
000 pound threshold doesn'tinclude payroll dividends, pens,
pensions, income bonuses.
(05:27):
It only includes if you arealmost working as a sole trader
or if you have property income.
So dividends from a limitedcompany wouldn't go towards that
threshold.
Dr James (05:40):
Oh right, wow, Okay.
So just to make that superduper clear for the dentists out
there that are taking 50K outof their limited company every
year, but let's say they dotheir 12 and a half K personal
allowance and then everything isdividends above that.
Maybe there's okay, betterexample.
They're taking out 60K everyyear, 12 and a half K personal
allowance, and do the math, therest of that in dividends, even
(06:04):
though they're over the 50kthreshold.
Because that's constituted ofdividends, they won't be
affected in the first year atall.
Amman (06:11):
So even when the threshold goes down to 20k, it
will still be based onself-employed income and not
dividends.
So any self-employed income isany income that you earn as an
individual in your own name.
If you've got a limited company, it will be your limited
company that's earning thatrevenue and then you're just
getting paid out as a directorslash shareholder.
Dr James (06:34):
Well, by that token, it sounds like it's not going to
affect a lot of dentistsimminently.
Have I got that right?
Because a lot of them will betaking dividends out.
Amman (06:42):
Yes, so most dentists who are within a limited company
structure, as long as they'renot earning any additional
income through properties etcetera, they won't be impacted.
It will be more towards thedentists who are working under
their own name or self-employed.
Dr James (06:57):
Yes, so sole traders or employed dentists?
No, of course it can't beemployed dentists, sole traders,
right?
Amman (07:04):
Yeah, exactly that.
Um, I think the thing to alsothink about here is that 50k
threshold is a combination ofself-employed and property
income.
So if you're if you're earningself-employed income of, say,
40k, but you've got a propertythat you let out for one grand a
month, the revenue that youwould have earned in the year
(07:27):
would be 12k plus your 40k.
You would be over the 50kthreshold yeah, understand, yeah
, 100.
Good to reiterate the propertyside of it too and I guess a
very key point here also is whenyou do these quarterly
submissions you will have tosubmit based on separate
(07:48):
businesses.
So if you have a dental incomeof, say, 40k and you've got
property income of, say 20k, youwill need to do separate
quarterly submissions for thosetwo different businesses.
Yeah, so just on that exampleof 40k as a dentist and say 12k
through a buy-to-let income inyour own name, that would
(08:08):
firstly put you over the £50,000threshold, so you would have to
comply with making tax digital.
But secondly, when you submiton a quarterly basis you will
have to submit twice, firstly asa dentist and then secondly for
your property business.
So essentially we're saying forthe full year you're going to
(08:29):
have to do eight submissions inthat scenario compared to just
one.
Dr James (08:34):
Yikes.
And then just to really spellthat out because this is
something that I findinteresting, going off what
you're saying, Amman, from yourdentistry and self-employed
income, or you solely had.
You had no income from yourdentistry but you had like 10
(08:55):
12k property income in yourpersonal in that you were
talking about a second ago.
If in each one of thosescenarios that was the only
income that you were receivingrespectively, you wouldn't have
to worry about mtd.
But it's the fact that themtogether cumulatively pushes you
over that 50K threshold thatnow means that you have to do it
(09:17):
twice each quarter, becauseit's two separate businesses.
Amman (09:21):
Exactly, yeah, you have to add the self-employed plus
the property income together toassess whether you hit that
threshold.
Dr James (09:29):
Nuts.
That's crazy.
There's layers to this right.
Amman (09:32):
Yes, it is.
And also, for example, just togive you a specific scenario,
we've not started this processyet.
The process starts in April.
So I'm sure more things willcome from this.
But if say, for example, adentist does their foundation
year and they join a practice asa self-employed individual on
(09:53):
September the 1st, they areessentially joining seven months
, five months into the year,with seven months to go up until
the end of March.
So in that period of time theymay earn, say, 45k between
September 1st to the 31st ofMarch.
However, okay, you're under thethreshold.
But in that scenario HMRC willwant you to proportion your
(10:16):
income on a monthly basis so youcan see whether you would
actually hit the 50K over a12-month period.
Dr James (10:24):
That makes sense.
It's like your payment on acoin right.
Amman (10:28):
No, not really so.
With a payment on a coin,you're paying half your tax bill
for the next period, whereas inthis scenario, in order to
assess yourself for the 50 000pound, hmrc want you to
proportion any income that youmay have started part way
through the year.
So let's say you join a dentalpractice as a self-employed
(10:52):
individual in March and you earn5k in that one month.
Now technically you're under thethreshold because you've only
earned £5,000 in that tax yearfrom the income.
But HMRC will say actually, ifyou spread that across a
12-month period, your incomewould have been 60,000.
(11:12):
Therefore, you should actuallybe complying with making tax
digital.
Dr James (11:17):
I see, yeah, okay, I'm with you Because, yeah, the
payment on accounting where Iwas coming from was more, in
that they project it forwards,but this is slightly different.
Yes, more was more in that theyproject it forwards, but this
is slightly different.
Yes, this is, this is slightlydifferent in that you may have a
payment on account, but it'sreally determined, really, what
(11:40):
they're interested in.
You'll always have a payment onaccount.
Well, you will, yeah, of courseyou will, but really, whether
or not that in turn qualifiesyou for it to be MTD would be if
your projected income is overthe 50K going forwards
effectively.
Excellent, okay, cool.
Well, listen, there's a lot totune on and digest here.
(12:00):
This is interesting stuff.
Okay, cool, let's talk about.
I know we mentioned whenearlier, and obviously this is
6th of April, right, wheneverthis all kicks in the new tax
year next year, and that's whenit starts off at the 50K
threshold.
And you mentioned otherthresholds and timeframes.
Is it okay if we had a recap ofthose, because those would be
(12:22):
really useful.
Amman (12:23):
Yeah, sure, so you're right, it starts on the 6th of
April 2026.
Now, whether you need to complyfrom the 6th of April 2026 will
be based on your 2024 to 2025tax return.
So the personal tax year that'sjust gone up until the end of
(12:45):
March.
You now are in the period ofsubmitting that tax return from
April to the end of January.
If, on that tax return, yourincome is over 50k for
self-employed and or property,then you will need to comply
from the 6th of April 2026.
If it's lower than 50k, thenyou could continue as you are
(13:09):
submitting once a year andessentially nothing really
changes.
However, from 2027, 6th of april, that threshold reduces from 50
000 down to 30 000 and thengain down from 30 to 20 000 in
2028 right yeah, um, just aquick thing to mention there as
(13:34):
well as you can actually electto work from the first of the
month rather than six instead ofthe 6th of april to say the 5th
of july.
Being the first quarter, youcan actually do the 1st of april
to the end of June and work asper the year, essentially.
Dr James (13:51):
Cool, fair enough.
Amman (13:54):
And then.
Dr James (13:54):
key thing to emphasize , though, is just to reiterate
what we're saying this is fromincome, not dividends, as, in
income, what we were talkingabout earlier, plus property
income as well, so,hypothetically, unless they
bring in some sort of a new rule, there's still a lot of
dentists that this may notaffect, unless they bring
(14:17):
dividends into the equation.
Amman (14:20):
Yes and no.
I think there's still quite afew dentists who are
self-employed, so it will impact, I would say, 95% of dentists
who are starting for a program.
Dr James (14:32):
Yeah.
Amman (14:33):
Most of them will be earning more than 50,000.
If you're a dentist and you'rein a limited company, well then
you probably won't be impacted,unless you have income elsewhere
that you're earning more thanyou need.
Dr James (14:47):
Seems reasonable Any talk of them including dividends
in the equation anytime soon.
Amman (14:52):
Not yet.
I mean, things are alwayschanging with HMRC and
essentially, the reason they aredoing this is because they want
to reduce that.
So any way they can do that,they will do that.
So there's no reason why theywon't start investing in 200,000
dividends as well.
Dr James (15:13):
All right, let's talk actionable next steps for the
dentists who are out there.
We mentioned PrEP in terms oflooking into some software
that's going to help us here.
Anything else dentists can do?
Amman (15:29):
Yeah.
So I guess one point to quicklytouch on before we move on to
that is you will have to submiton a quarterly basis, but also
there will be a year-enddeclaration as well.
Oh, you're essentially havingto submit five times in the year
, all quarters or each quarter,and then one at the end of the
(15:52):
year, basically confirming allof the numbers are correct.
But also that gives you anopportunity to add in any
accounting or tax adjustmentsand also add in payroll pensions
dividend, so that, hey, youmust have a full picture of what
your income was for that yeargood to know.
Dr James (16:14):
So we definitely got to do that.
Any other considerations?
Amman (16:17):
yeah, the consideration would be.
Lastly, I would say, try tounderstand if and when making
tax digital applies to you.
It might not be something thatyou need to worry about for
April 2026.
However, the threshold iscontinuing to decrease, so
there's a good chance that ifyou are running and you come in
your own name, you are going tohave to start complying at some
(16:39):
point.
Another thing to think about isactually trying to get your
business banks, your ducks, in arow for your businesses.
So if you have self-employedbusiness, you should already
have a separate business bankaccount for that business.
But if you don't't, now wouldbe the time to try and get that
(16:59):
set up so that when you do needto start integrating your
business bank accounts with thesoftwares, you don't have
personal transactions goingthrough those yeah, because
that's going to mess everythingup, right that?
other good habits would be, Iwould say.
Actually, some of our clientsare already on some of these
(17:20):
softwares and even thoughthey're not necessarily
submitting on a quarterly basis,they're kind of forming that
good habit of tracking theiremployment expenses to make sure
they are kind of in the swingof things.
Dr James (17:32):
Absolutely Any more tips where those came from.
Amman (17:34):
Yeah, any other tips.
I would say definitely.
Speak to an accountant.
Any more tips where those camefrom?
Yeah, any other tips.
I would say definitely, speakto an accountant.
You should already be havingthese conversations with your
accountant to make sure you areacross the changes.
And if you don't have that inplace, then make sure you speak
to your accountant.
They should know exactly what'sgoing on.
Dr James (17:52):
All right, you touched upon this just a second ago and
you hinted at why HMRC aredoing this.
They're doing this from thepoint of view of running a
tighter ship, which wouldhopefully generate more tax
revenue, right.
Amman (18:04):
Yeah, that's right.
So essentially, the reasonthey're doing this is to reduce
the tax gap.
They want to reduce thedifference between the tax
that's actually being collectedversus what should be collected,
between the tax that's actuallybeing collected versus what
should be collected.
But also, I think it is goodfor business owners and dentists
, because dentists willessentially now be able to see
(18:26):
their profit and loss to somedegree each quarter, so they
will know what their taxliability might be at the end of
the year by keeping them top ofthese submissions.
There are definitely a fewthings that won't change, though
, for dentists.
So the actual payment deadlinesat the moment are not changing,
it's just the submissions.
(18:46):
So each quarter you will besubmitting.
It will only be at the end ofthe year, when you do your final
year-end declaration, that youwill then be required to make a
payment.
It's also worth noting if, forwhatever reason, a quarterly
submission is incorrect, won'tbe fined by HMRC.
(19:09):
They'll just expect you toupdate it in the following
quarter.
It's only when you do thatdeclaration at the end of the
year that you're basicallycomplaining that all the numbers
are correct.
We need to do a podcast on this topic because
this is happening super soon anda lot of dentists A don't even
know what it is because theyhaven't heard of it, or, b they
know a little bit about it, butthey could know more, so let's
address that today.
I'm also happy to share thatthere is free verifiable CPD
associated with this podcastepisode.
Whenever you've finished theepisode, all you have to do is
(00:21):
click the link in the podcastdescription.
It'll take you right throughthe dentistry invest website.
You'll be able to complete ashort questionnaire and, once
passed, you fill in yourreflections and we'll go ahead
and email over to you yourverifiable CPD certificate,
which is entirely free.
What that means is this podcastepisode will be able to
contribute towards yourverifiable CPD hours during this
(00:43):
learning cycle.
Making tax digital.
What is that, Amman?
Amman (00:53):
Yes.
So essentially, James, it's anew structure to the
self-assessment process.
So the old structure was youwould have your personal tax
year between April to the end ofMarch.
You would then have 10 monthsfor you or your accountant to
submit your tax return.
So obviously there's quite achunky period of time there for
(01:13):
you to kind of get your taxes inorder and make that payment.
Now it's changing completely.
It's basically based on thesethree key principles.
So firstly, it's beendigitalized, so there's no more
paper records.
So each dentist will need tomake sure that they have a
(01:36):
software in place so that theycan submit to HMRC.
So that software needs to becompatible for making tax
digital, which essentially meansthat you will connect your bank
account to a software likeaccounting like zero, sorry and
you will then need to startsubmitting on a more regular
basis.
(01:56):
So essentially, what hmrc wantto do is they want you to start
submitting on a quarterly basisinstead of at the end of the
year which is obviously quite abig change for self-employed
individuals, right, I see.
Dr James (02:18):
So just to make this super duper clear, it's a little
bit like zero, or we need somesoftware that's similar-ish to
zero and basically every dentistneeds to have it that's right.
Amman (02:24):
Yeah, so it will be similar to zero.
Zero will have their ownproduct quickbooks will have
their own product.
There'll be a number ofproducts on the, on the platform
, on the on the market for youto purchase.
Essentially, you can also dothis on a spreadsheet too.
However, you need to ensure youhave some kind of bridging
software so that you can makethose quarterly submissions.
Dr James (02:47):
Understood and if I've gathered this correctly, you
will have all the data at yourside in your Xero or whichever
software that you choose, butyou still have to send them to
your accountant as a middleman.
Have I got that right?
Amman (03:06):
man, have I got that right?
That's right.
Ultimately, you can as with thecurrent process, you can submit
your own self-assessment, butobviously, if you want to make
sure that you've got a charteredaccountant looking across it
and all the tax figures arecorrect and there's no
additional expenses or taxesthat you're missing out on, then
it's always best to doublecheck with an accountant.
Dr James (03:23):
I see.
All right.
Well, just to really spell thisout in terms of who this
affects it's not just dentists,is it all self-employed people?
Is that how it works?
Amman (03:34):
Yes, so essentially, if you, it's based on thresholds.
So this is going to be phasedin from April 2026 and the first
year will be based on whetheryou're self-employed and or
property income will be over£50,000.
To 2025 tax return, which isdue at the end of this January,
(04:11):
if that shows self-employed andor property income over 50,000,
you will then have to complywith making tax additional from
April 2026.
Dr James (04:18):
Right.
This is so useful to know.
Amman (04:20):
Yes, so obviously most dentists who are self-employed
will be impacted by this.
That threshold is going toreduce year on year for the next
, for the two years following2026.
So it will go down from 50k to30k to 20k.
So it's fair to say themajority of dentists will be
(04:42):
impacted by this over the nextone to two years.
Dr James (04:45):
So it is coming, it's happening and you know, when you
said that 50k threshold just asecond ago, does that mean that
dentists who are trading as alimited company and keeping a
lot of their earnings within thelimited company but potentially
taking out under 50k everysingle year, will they still be
affected in the first year?
Amman (05:06):
Good question taking out under 50k every single year,
will they still be affected inthe first year?
Good question.
So actually, even if they wereto be taking out more than 50k,
dentists within limitedcompanies are very unlikely, in
this pure scenario, to beaffected by this, because the 50
000 pound threshold doesn'tinclude payroll dividends, pens,
pensions, income bonuses.
(05:27):
It only includes if you arealmost working as a sole trader
or if you have property income.
So dividends from a limitedcompany wouldn't go towards that
threshold.
Dr James (05:40):
Oh right, wow, Okay.
So just to make that superduper clear for the dentists out
there that are taking 50K outof their limited company every
year, but let's say they dotheir 12 and a half K personal
allowance and then everything isdividends above that.
Maybe there's okay, betterexample.
They're taking out 60K everyyear, 12 and a half K personal
allowance, and do the math, therest of that in dividends, even
(06:04):
though they're over the 50kthreshold.
Because that's constituted ofdividends, they won't be
affected in the first year atall.
Amman (06:11):
So even when the threshold goes down to 20k, it
will still be based onself-employed income and not
dividends.
So any self-employed income isany income that you earn as an
individual in your own name.
If you've got a limited company, it will be your limited
company that's earning thatrevenue and then you're just
getting paid out as a directorslash shareholder.
Dr James (06:34):
Well, by that token, it sounds like it's not going to
affect a lot of dentistsimminently.
Have I got that right?
Because a lot of them will betaking dividends out.
Amman (06:42):
Yes, so most dentists who are within a limited company
structure, as long as they'renot earning any additional
income through properties etcetera, they won't be impacted.
It will be more towards thedentists who are working under
their own name or self-employed.
Dr James (06:57):
Yes, so sole traders or employed dentists?
No, of course it can't beemployed dentists, sole traders,
right?
Amman (07:04):
Yeah, exactly that.
Um, I think the thing to alsothink about here is that 50k
threshold is a combination ofself-employed and property
income.
So if you're if you're earningself-employed income of, say,
40k, but you've got a propertythat you let out for one grand a
month, the revenue that youwould have earned in the year
(07:27):
would be 12k plus your 40k.
You would be over the 50kthreshold yeah, understand, yeah
, 100.
Good to reiterate the propertyside of it too and I guess a
very key point here also is whenyou do these quarterly
submissions you will have tosubmit based on separate
(07:48):
businesses.
So if you have a dental incomeof, say, 40k and you've got
property income of, say 20k, youwill need to do separate
quarterly submissions for thosetwo different businesses.
Yeah, so just on that exampleof 40k as a dentist and say 12k
through a buy-to-let income inyour own name, that would
(08:08):
firstly put you over the £50,000threshold, so you would have to
comply with making tax digital.
But secondly, when you submiton a quarterly basis you will
have to submit twice, firstly asa dentist and then secondly for
your property business.
So essentially we're saying forthe full year you're going to
(08:29):
have to do eight submissions inthat scenario compared to just
one.
Dr James (08:34):
Yikes.
And then just to really spellthat out because this is
something that I findinteresting, going off what
you're saying, Amman, from yourdentistry and self-employed
income, or you solely had.
You had no income from yourdentistry but you had like 10
(08:55):
12k property income in yourpersonal in that you were
talking about a second ago.
If in each one of thosescenarios that was the only
income that you were receivingrespectively, you wouldn't have
to worry about mtd.
But it's the fact that themtogether cumulatively pushes you
over that 50K threshold thatnow means that you have to do it
(09:17):
twice each quarter, becauseit's two separate businesses.
Amman (09:21):
Exactly, yeah, you have to add the self-employed plus
the property income together toassess whether you hit that
threshold.
Dr James (09:29):
Nuts.
That's crazy.
There's layers to this right.
Amman (09:32):
Yes, it is.
And also, for example, just togive you a specific scenario,
we've not started this processyet.
The process starts in April.
So I'm sure more things willcome from this.
But if say, for example, adentist does their foundation
year and they join a practice asa self-employed individual on
(09:53):
September the 1st, they areessentially joining seven months
, five months into the year,with seven months to go up until
the end of March.
So in that period of time theymay earn, say, 45k between
September 1st to the 31st ofMarch.
However, okay, you're under thethreshold.
But in that scenario HMRC willwant you to proportion your
(10:16):
income on a monthly basis so youcan see whether you would
actually hit the 50K over a12-month period.
Dr James (10:24):
That makes sense.
It's like your payment on acoin right.
Amman (10:28):
No, not really so.
With a payment on a coin,you're paying half your tax bill
for the next period, whereas inthis scenario, in order to
assess yourself for the 50 000pound, hmrc want you to
proportion any income that youmay have started part way
through the year.
So let's say you join a dentalpractice as a self-employed
(10:52):
individual in March and you earn5k in that one month.
Now technically you're under thethreshold because you've only
earned £5,000 in that tax yearfrom the income.
But HMRC will say actually, ifyou spread that across a
12-month period, your incomewould have been 60,000.
(11:12):
Therefore, you should actuallybe complying with making tax
digital.
Dr James (11:17):
I see, yeah, okay, I'm with you Because, yeah, the
payment on accounting where Iwas coming from was more, in
that they project it forwards,but this is slightly different.
Yes, more was more in that theyproject it forwards, but this
is slightly different.
Yes, this is, this is slightlydifferent in that you may have a
payment on account, but it'sreally determined, really, what
(11:40):
they're interested in.
You'll always have a payment onaccount.
Well, you will, yeah, of courseyou will, but really, whether
or not that in turn qualifiesyou for it to be MTD would be if
your projected income is overthe 50K going forwards
effectively.
Excellent, okay, cool.
Well, listen, there's a lot totune on and digest here.
(12:00):
This is interesting stuff.
Okay, cool, let's talk about.
I know we mentioned whenearlier, and obviously this is
6th of April, right, wheneverthis all kicks in the new tax
year next year, and that's whenit starts off at the 50K
threshold.
And you mentioned otherthresholds and timeframes.
Is it okay if we had a recap ofthose, because those would be
(12:22):
really useful.
Amman (12:23):
Yeah, sure, so you're right, it starts on the 6th of
April 2026.
Now, whether you need to complyfrom the 6th of April 2026 will
be based on your 2024 to 2025tax return.
So the personal tax year that'sjust gone up until the end of
(12:45):
March.
You now are in the period ofsubmitting that tax return from
April to the end of January.
If, on that tax return, yourincome is over 50k for
self-employed and or property,then you will need to comply
from the 6th of April 2026.
If it's lower than 50k, thenyou could continue as you are
(13:09):
submitting once a year andessentially nothing really
changes.
However, from 2027, 6th of april, that threshold reduces from 50
000 down to 30 000 and thengain down from 30 to 20 000 in
2028 right yeah, um, just aquick thing to mention there as
(13:34):
well as you can actually electto work from the first of the
month rather than six instead ofthe 6th of april to say the 5th
of july.
Being the first quarter, youcan actually do the 1st of april
to the end of June and work asper the year, essentially.
Dr James (13:51):
Cool, fair enough.
Amman (13:54):
And then.
Dr James (13:54):
key thing to emphasize , though, is just to reiterate
what we're saying this is fromincome, not dividends, as, in
income, what we were talkingabout earlier, plus property
income as well, so,hypothetically, unless they
bring in some sort of a new rule, there's still a lot of
dentists that this may notaffect, unless they bring
(14:17):
dividends into the equation.
Amman (14:20):
Yes and no.
I think there's still quite afew dentists who are
self-employed, so it will impact, I would say, 95% of dentists
who are starting for a program.
Dr James (14:32):
Yeah.
Amman (14:33):
Most of them will be earning more than 50,000.
If you're a dentist and you'rein a limited company, well then
you probably won't be impacted,unless you have income elsewhere
that you're earning more thanyou need.
Dr James (14:47):
Seems reasonable Any talk of them including dividends
in the equation anytime soon.
Amman (14:52):
Not yet.
I mean, things are alwayschanging with HMRC and
essentially, the reason they aredoing this is because they want
to reduce that.
So any way they can do that,they will do that.
So there's no reason why theywon't start investing in 200,000
dividends as well.
Dr James (15:13):
All right, let's talk actionable next steps for the
dentists who are out there.
We mentioned PrEP in terms oflooking into some software
that's going to help us here.
Anything else dentists can do?
Amman (15:29):
Yeah.
So I guess one point to quicklytouch on before we move on to
that is you will have to submiton a quarterly basis, but also
there will be a year-enddeclaration as well.
Oh, you're essentially havingto submit five times in the year
, all quarters or each quarter,and then one at the end of the
(15:52):
year, basically confirming allof the numbers are correct.
But also that gives you anopportunity to add in any
accounting or tax adjustmentsand also add in payroll pensions
dividend, so that, hey, youmust have a full picture of what
your income was for that yeargood to know.
Dr James (16:14):
So we definitely got to do that.
Any other considerations?
Amman (16:17):
yeah, the consideration would be.
Lastly, I would say, try tounderstand if and when making
tax digital applies to you.
It might not be something thatyou need to worry about for
April 2026.
However, the threshold iscontinuing to decrease, so
there's a good chance that ifyou are running and you come in
your own name, you are going tohave to start complying at some
(16:39):
point.
Another thing to think about isactually trying to get your
business banks, your ducks, in arow for your businesses.
So if you have self-employedbusiness, you should already
have a separate business bankaccount for that business.
But if you don't't, now wouldbe the time to try and get that
(16:59):
set up so that when you do needto start integrating your
business bank accounts with thesoftwares, you don't have
personal transactions goingthrough those yeah, because
that's going to mess everythingup, right that?
other good habits would be, Iwould say.
Actually, some of our clientsare already on some of these
(17:20):
softwares and even thoughthey're not necessarily
submitting on a quarterly basis,they're kind of forming that
good habit of tracking theiremployment expenses to make sure
they are kind of in the swingof things.
Dr James (17:32):
Absolutely Any more tips where those came from.
Amman (17:34):
Yeah, any other tips.
I would say definitely.
Speak to an accountant.
Any more tips where those camefrom?
Yeah, any other tips.
I would say definitely, speakto an accountant.
You should already be havingthese conversations with your
accountant to make sure you areacross the changes.
And if you don't have that inplace, then make sure you speak
to your accountant.
They should know exactly what'sgoing on.
Dr James (17:52):
All right, you touched upon this just a second ago and
you hinted at why HMRC aredoing this.
They're doing this from thepoint of view of running a
tighter ship, which wouldhopefully generate more tax
revenue, right.
Amman (18:04):
Yeah, that's right.
So essentially, the reasonthey're doing this is to reduce
the tax gap.
They want to reduce thedifference between the tax
that's actually being collectedversus what should be collected,
between the tax that's actuallybeing collected versus what
should be collected.
But also, I think it is goodfor business owners and dentists
, because dentists willessentially now be able to see
(18:26):
their profit and loss to somedegree each quarter, so they
will know what their taxliability might be at the end of
the year by keeping them top ofthese submissions.
There are definitely a fewthings that won't change, though
, for dentists.
So the actual payment deadlinesat the moment are not changing,
it's just the submissions.
(18:46):
So each quarter you will besubmitting.
It will only be at the end ofthe year, when you do your final
year-end declaration, that youwill then be required to make a
payment.
It's also worth noting if, forwhatever reason, a quarterly
submission is incorrect, won'tbe fined by HMRC.
(19:09):
They'll just expect you toupdate it in the following
quarter.
It's only when you do thatdeclaration at the end of the
year that you're basicallycomplaining that all the numbers
are correct.
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