April 16, 2026 • 32 mins
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Frozen thresholds can be more painful than a tax rate rise, and dentists are feeling it everywhere: higher marginal rates, the £100,000 personal allowance trap, and less room for error when cashflow is tight. I’m joined by accountant Matthew Norton from DJH to map the UK tax changes that matter most in the 2026 to 2027 tax year, with plain-English explanations and the practical “what would you do differently on Monday?” angle.
We dig into fiscal drag, National Insurance pressures on practices, and the student loan reality for Plan 2 dentists, including why repayments can barely touch the balance when interest is high. Then we get into the big behavioural shift: Making Tax Digital for Income Tax. If your self-employed turnover crossed the £50,000 line, quarterly reporting and the right MTD software are now essential, and getting set up early is the difference between smooth compliance and last-minute panic.
From there we tackle dividend tax changes, the tiny dividend allowance, and why the old salary-and-dividends routine needs a fresh look for limited company dental practices. We also cover tax-efficient choices that can still work, like keeping money inside the company when you don’t need to extract it, the logic behind holding companies and family investment companies, and the current incentives around electric company cars and benefit in kind.
To finish, we look forward: Business Asset Disposal Relief and capital gains tax changes that affect practice sales, the April 2027 cash ISA limit shift for under-65s, and the growing concern that private pensions may be pulled into inheritance tax planning. Subscribe for more dentist-focused money and tax planning, share this with a colleague, and leave a review if you want more deep dives like this.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dr James (01:43):
The new financial year is upon us, and the purpose of
this podcast today is to recap alot of the things that are
coming reasoning that usdentists need to be aware about,
and also some of the thingsthat are upcoming in forthcoming
tax years, forthcoming newfinale.
I'm joined by professionalaccountant Mr.
Matthew Norton from DJE, wherewe're today to talk about every
(02:04):
single tax change that usdentists need to know so we can
be prepared and ensure thatwe're as tax efficient as
possible.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
Smart Money Members Club alsoincludes multiple mini courses
and webinar series on financefor dentists, including how to
become as tax efficient aspossible, as well as
(02:25):
understanding investing.
All this content counts asverifiable CPD, and you can
download your certificates thereand then on completing each
lesson.
In addition to this, we alsoinclude a whopping 10% discount
on your dental indemnity and a5% discount on lab bills for
dental principals, amongst otherperks and discounts for
members.
Please use the link in thedescription to claim your
(02:46):
verifiable CPD for this episode.
Matthew, let's talk about whattax changes dentist to be aware
of that have just kicked in,given that we're now in new the
new financial year, which is ofcourse at the time of recording
(03:07):
on this podcast, April the 6th,2026, up until April the 5th,
2027.
So yeah, probably a good placeto begin.
A little bit of a recap, if youwill, because m a lot of people
out there will be aware ofthese things because there'll
have been changes that have beenimplemented at recent budgets.
So what will we now see kickingin?
Speaker 1 (03:29):
So I think it's important to set the scene,
James.
So if we think about this timein sort of the autumn after
Rachel Reese gave her budget, Ithink that the line of cap
hearing was it wasn't quite asbad as we thought it was going
to be.
At the time, there was a bit ofgood news just before the
budget was announced.
And I think it's important toremember when we look at the
budget and we talk about thebudget, it's not just a budget
(03:49):
for the next 12 months.
The idea of the budget is it'sworking towards sort of longer
term goals for the government,usually on a kind of five-year
cycle.
So some of these sort of lessertax rates and then sort of the
less bad news, if you like, hashappened simply because they
thought their projections may bea little bit better.
Now, obviously, if certainthings happen in the environment
(04:11):
we're in, such as the Irancrisis at the moment, that can
scupper the plans.
So the feeling I got lastbudget, as I said, was it wasn't
as bad as we felt it was goingto be.
But if things carry on as theyare, growth in the UK is is
struggling.
We might see some more taxchanges coming up in the next
couple of years to be aware of.
Now I think look at the bigpicture as well.
(04:34):
Sort of obviously the big onewe talk about is sort of the
stealth tax rises, if you like.
So the stealth tax rises orfiscal drag, as people sometimes
refer to it as, or the factthat there's no major changes in
income tax, national insurancethis year.
And some people see that as agood thing, but effectively,
with inflation, as people'searnings go up, more and more
(04:56):
people are going to be pulledinto higher rate of tax, uh, the
higher rate tax band of tax at40%, additional rate tax at 45%,
and more commonly as well, withmost with most dentists now,
they are breaching that £100,000threshold.
And if people are familiar withthat, once you breach a
£100,000 level of income, youstart losing your personal
(05:17):
allowance.
And also, if you do have kids,you can potentially use as well
your tax-free childcare, whichcould be a real a real benefit.
So them freezes themselves areanother form of sort of fiscal
drag and sort of a negative,really, if you like.
Dr James (05:31):
Yes, can't overstate that enough because it's it's
yeah, it needs to uh I ideallyit would move uh in accordance
with inflation or like theofficial figures.
But you might know this off thetop of your head.
When was the last time theyactually changed those tax
rates?
Because it's been quite awhile, hasn't it?
Speaker 1 (05:48):
Yeah, I think it was 2021, it was under the
Conservative government.
And at the time it was quite acontroversial thing if people
remember, because every yearthat this person allowance would
generally increase and creep upwith inflation slightly.
Um, but I think because ithappened so long ago now, James,
that people are just taking itas the norm and you know, sort
of expecting it to happen whenyou know it's it's frozen now
until 2030.
(06:08):
But I can't really emphasizeenough how much of an impact
that's having on people's um taxand reduction in their post-tax
earnings.
Dr James (06:16):
And what about, and you'll know more about this than
me, but what about nationalinsurance bans as well?
Are they also frozen?
Speaker 1 (06:22):
Yeah, they've been frozen again as well.
And from last year, if youremember, uh employers' national
insurance crept up to 15% aswell.
So, again, another impact onbusinesses.
Minimum wage has gone up againthis year as well.
I was gonna touch on that alittle bit later, but I'll bring
it in now.
Again, minimum wage has gone upby about another four or five
percent.
And sometimes as well, peoplethink minimum wage, they think
(06:44):
of just the people who are kindof on that lower level of pay.
Well, actually, all of asudden, if you've got to
increase the people at yourbusinesses who are on the lower
level of pay, everyonerealistically needs to be pushed
up to the same level forfairness.
So actually, you know, it doesimpact salaries across across
the business.
Dr James (07:01):
Yeah, yeah, 100%.
Anyway, not to not to steal theshow and derail the
conversation, but yes, anyway,you're in full flow there.
So income tax brackets, incometax bans, and then other changes
that we should be aware of.
Speaker 1 (07:13):
Yeah, so I think everyone's sort of aware of this
one already, but the big one atthe moment as well, that's been
in the news over the last fewweeks, is is a bit of posity, I
suppose.
Um the government haveannounced that they are capping
interest rates on class twostudent loans for this financial
year and this academic year.
So a little bit of good newsthere, obviously, with sort of
the danger of inflation andinterest rates increase there
(07:34):
with the with the Iran war.
Um that's a little bit of goodnews for anyone with a with a
with a plan two student loan.
Dr James (07:41):
Yeah, absolutely.
Because previously, for peoplewho uh don't know this, I
believe it's linked to CPI,isn't it?
Speaker 1 (07:48):
Yes, it is, yeah.
CPI.
And as that as that increases,obviously that the interest rate
increases, and um you know mostpeople who are coming out of
the university will have plantwo student loans at a high
level, and the level of interestcan be can be sizable.
Dr James (08:02):
Can you give us an idea?
Maybe you know this off the topof your head, who just what
demographic of people are onplan two loans, like what era
would that apply to?
Speaker 1 (08:10):
Yeah, sure.
So is anyone who would havestarted the studies after 2012?
Dr James (08:15):
Right, I see.
So some of the some of the theyoung I've just missed out on
that then because I was 2011.
But then I I did get in whenthe when the when the the uh
maximum fees were still threegrand a year, so I can't.
Speaker 1 (08:25):
I know it it's gone crazy.
You know, I see obviously taxreturns for my clients, and I've
had a situation just to try andget it, kind of show how the
how how bad the interest ratesare at the moment on these
student loans.
I had a client contact mebecause they didn't think that
their student loan payments hadbeen transferred from HMRC to
the student loans company.
So you sent me the student loanstatement to have a bit of a
look at, and all that hadhappened is the level of
(08:48):
repayment they had made had justsimply covered the interest in
the year.
The actual balance of thestudent loan hadn't it decreased
at all, it just literallycovered the interest.
Dr James (08:56):
Oh no.
Speaker 1 (08:57):
And this is someone earning over 60,000 pounds a
year.
So we're not talking about youknow small, you know, small
earners, we're talking aboutkind of your most average
associate in the first couple ofyears.
Dr James (09:05):
There we go, crazy.
Okay, well, some somepositivity in there somewhere.
Speaker 1 (09:11):
Definitely.
And moving on as well, I thinkagain, you've done podcasts on
this previously and things, butuh obviously the big change
really that you know, thebiggest behavioural shift, if
you like, in tax for dentists inin my lifetime at least, is
this change to making taxdigital.
And I know you've done a lot onit already, so I won't sort of
go on about it too much, butobviously just make anyone aware
(09:31):
anybody whose self-employedturnover was in excess of
£50,000 in their 2024-25 taxreturn, I've been pulled into
it.
And obviously, we've gone livewith it now.
Um, effectively, we need to getclients on making tax digital
compliance software and makesure that their quarterly
returns are being submitted ontime.
Dr James (09:53):
Nice, and you know what, just quick opportunity
shout out.
There's uh we have done contenton making tax digital.
Uh, however, I'm gonna do awebinar, another webinar very,
very, very soon uh with someamazing accountants, which is
gonna talk about what you can doif you've missed the boat and
also even people who have uhupdated their making tax digital
(10:13):
or you know who feel likethey're on top of it, what to do
to ensure that you arecompliant and that there's no
issues going forwards.
So, yeah, shout out thatwebinar just while we're on the
topic.
Yeah, I'll announce the detailsof that in the mailing list in
the Facebook group very soon.
Speaker 1 (10:27):
Yeah, so so so important.
They have they have announcedunofficially that there's
there's gonna be no sort ofpenalties this initial year.
Um, but obviously people wantto get in good habits with it
straight away.
Um it's not it's no good, youknow, going to your accountant
the day before the deadline andthe submission is due and kind
of asking them to kind ofregister you and and sign you
for software, it needs to bedone in a timely manner and make
(10:48):
sure everyone's got time to dowhat they need to do.
As I said, with making taxdigital, it is the biggest
behavioural shift in tax fordentists in years.
And as James mentioned there,he's got another webinar on it
coming up, so it's uh I wouldsteal his line like too much on
that one.
And I'll I'll I'll move on tosomething that's probably gonna
(11:09):
affect people more than yourealise, and that's a change in
the dividend tax rates, James.
Dr James (11:14):
Yes, yes.
I recall this coming in, butyeah, I'm I'm interested to have
a little bit of a recap fromyou.
Speaker 1 (11:19):
Yeah, sure.
So what it means is that fromthe 6th of April, uh basic rate
taxpayers are now paying 10.75%on the first 30 uh the first
section of basic rate band ofdividend income.
Historically that was 8.75%.
And then your higher ratetaxpayers are going to be paid
35.75%, whereas previously theywere paying 33.75%.
(11:42):
Now, you know, two percentagepoints doesn't sound like a
great jump, but when we'retalking of you know sort of tens
of thousands of pounds, and insituations where the margins
have been squeezed and squeezedover the years on limited
companies and the tax efficiencyof them, it again just sort of
adds to the headaches a littlebit, and that sort of classic
(12:02):
salary and dividends model isgetting squeezed more and more.
And I think it's just more andmore important to actually
making sure that people arehaving the right conversations
with their accountants to makesure that how they're being
remunerated is the best is itbeing done so in the best
possible way.
In some situations, it might bebetter to take a higher salary
than dividends.
I think for the time being,we're still keeping with the
(12:22):
main model of paying adirector's salary, usually
around 12 and a half thousandand topping up that with
dividends.
But I always say that each caseneeds to be judged on its
merit.
Dr James (12:33):
And yeah, and as you say, it's it's contextually, you
know, where how how much israised over the years.
I I even remember, yeah, it wasnot too long ago, it was seven
and seven and a half percent,wasn't it?
I believe on the basic rate.
And that was only like threeyears ago, and now we're on ten
and a half, and that's yeah.
So basically it's actually 50%more if you think about it,
right?
Speaker 1 (12:53):
Yeah, and the difference allowance as well,
you know, years gone by thedifference allowance started at
£5,000 before you paid any tax,and now that's right down to
£500.
Dr James (13:03):
Seriously, I think I had it in my head it was two,
was it two recently?
Speaker 1 (13:06):
Yeah, I think it went from five to two to one to five
hundred pounds, is where we aretoday.
So it brought it down graduallyto hope you don't realize as
much.
Jeez.
Dr James (13:15):
Anyway, okay, well, yeah, let's not dwell on that
too much.
Moving swiftly on, somethingI'd rather really not think
about.
Speaker 1 (13:21):
But anyway, I but I think that I think the main
thing people need to look at aswell is that with the dividend
rates going up, actually, dothey need as much money out of
the company as they currentlyare taking?
Because, you know, if you'renot needing that money out of
the company to live off, youknow, I'm not saying live off
beans and toast for the rest ofyour life, you know, you need to
want to live your lifestyle andbe able to go on holiday.
But if you can leave more moneyin the company, you are going
(13:43):
to pay less tax on itpersonally.
You know, that money could bethen be used for other
investments, it could be used toput into private pensions.
And we've seen a lot moreclients these days actually use
things called family investmentcompanies.
And family investment companiesare where you might have family
members who are shareholders,and the main purpose of that
(14:04):
company is to make investmentsand bring kind of family family
into it.
And what that means is it meansthat money isn't kind of
leaving the company and beingtaxed on the individual, it's
being kept in the company, butbeing used maybe investments,
maybe a buy-to-left property,stocks and shares, investments,
and things like that.
And that model tends to workquite well where you have maybe
a holding company above yourtrading company, because when
(14:27):
you pass dividends from thetrading company up to the
holding company, that istax-free because that's tax
neutral.
But it means the holdingcompany then could maybe loan
money to another company or makeits own investments.
Dr James (14:40):
Yeah, of course.
And again, that's actuallysomething we really need to do a
podcast on when the Dennis WhoInvest podcast is family
investment companies.
But yes, good stuff.
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Speaker 1 (16:38):
Yeah, and also as well, I think there's still talk
of uh another 2% increase intax for landlords as well,
possibly next year.
Um so again, if you're able tobuy property inside a limited
company, you'll be exempt fromthe extra 2% uh tax as well.
Dr James (16:53):
How would that work?
You mean on the income fromproperty on the income, yeah.
Speaker 1 (16:57):
So it's it's kind of non-earned income, so possibly
savings income and rentalincome.
Um an extra 2% as has beentalked about.
Interesting.
Dr James (17:05):
Yes, but of course that wouldn't apply.
It would be uh it would becorporation tax if it was in a
company.
Speaker 1 (17:10):
Yes, so you'd be exempt from that, you're paying
corporation tax.
Yeah.
And then as I said, the money'sbeing capped in the company.
Maybe family members areshareholders, and you can pass
some wealth down uh to otherfamily members as well.
Good stuff.
And one thing I do find usefulas well is we I think we've
spoken before about sort ofelectric cars and company cars.
And the the company cars are agreat tool because the tax
(17:34):
breaks on them are reallygenerous at the moment still.
If you're a member of this timelast year, James, that
originally we we'd call firstyear allowances on 100% new
unused electric cars was goingto be scrapped from March 2026.
The government did a bit of aU-turn as they as they do in the
last budget and pushed thatdate back until April next year.
(17:54):
So anyone who's looking atelectric cars, you still have
another 12 months to look atcompany electric cars and get a
full 100% first year allowancesin that that year of purchase.
Dr James (18:05):
On new and unused electricity.
Is there any tax relief on uhsecondhand?
Speaker 1 (18:13):
Uh secondhand, you'll still get what's called writing
down allowance.
So writing down allowance aswell, again, a bit more
negativity has just beenreduced.
So for a long time, writingdown allowance was 18%.
And what that effectivelymeans, you get 18% of the value
off each year until the value ofthe vehicle is written down to
nil effectively, or more likelyyou've sold the car.
(18:35):
But that rate is now reduceddown to 14%.
Dr James (18:40):
Right, understood.
So there is there is some levelof tax relief on.
Speaker 1 (18:43):
Yes, it's still available.
But the big tax relief for meis a bit of a stealth tax relief
again, in a sense, that becauseyou get that tax relief upfront
for everyone to save yourcorporation tax, but that is
then replaced with what's calledbenefit in kind tax.
So anyone out there who's got acompany car might be aware of
this already, but you'll bepaying what's called the benefit
in kind tax on the benefit, ifyou like, of owning a company
(19:06):
car and having access to acompany car.
And that benefit in kind tax isbased purely around the list
price and the CO2 emissions.
So the more the lower the CO2emissions, so the more sort of
friendly the car is to theenvironment, the less tax you'll
pay.
Dr James (19:21):
Interesting.
But if that's a if that's anelectric car and there's zero
emissions, yeah, then there isno benefit in kind tax, right?
Speaker 1 (19:30):
So there'll be a small benefit in kind.
I think the rate this year isto now four percent on the less
price of the car.
Dr James (19:36):
Right.
Speaker 1 (19:36):
Yeah, but as the CO2 emissions increase, that
percentage increases.
So by the time you get to a uhan ice and ice big gas cruzzling
range where you would say,yeah, you could be paying
benefit in kind tax and maybe40-45% on the on the original
value of the car when it wasnew.
Sure.
And at that point, it doesn'ttend to be tax efficient to have
a company car.
Dr James (19:55):
That was literally the next thing I was going to say,
because it's uh from what theaccountants tell me, you know,
everybody's obsessed withputting things through their
business, right?
But actually, there comes apoint where in certain
situations you're better offjust buying it in a personal
name and a personal name.
Same with assets as well, likeowning, I believe it's uh
watches and art, they're knownas chassels.
Is that correct?
Yes, yeah.
(20:15):
Yeah.
And if you own them in apersonal name and you sell them
on, there's no CGT.
Speaker 1 (20:19):
Yeah, it's correct.
As earners wasting shuttles,where effectively you've got a
sort of lifespan, if you like,um, where kind of investments
would have no lifespan andthere's a capital gain on it.
Things that are kind of likeracehorses, for example, are
another one that's classes awasting shuttle.
Um, and then effectively,because it's got a smaller
lifespan, um, there's no capitalgain stacks on them items.
Dr James (20:40):
That's why, and not to get into sort of uh too too too
far down this rabbit hole, butextremely wealthy people always
buy art, right?
Because you're converting yourmoney into a tax-free asset,
which is hopefully going toappreciate with time, and
there's no CGT lab, orespecially if you have the money
in a personal name.
But yeah, that's that's whythat happens, and that's why
that's kind of a a thing.
Uh that's why it's sort of uhpeople people talk about that,
(21:03):
don't they?
Or it's like a recurring themein TV shows that rich people do
that.
And I learned that recently, orwell, you know, over the like
maybe a few years ago, I learnedthat I was like, oh, so that's
why that happens.
But anyway, that brings usnicely on to the next thing we
plan to talk about, which wasCGT and B A D R.
Speaker 1 (21:19):
Yeah.
So again, this is a really bigone.
I think again, it's been in thenews, people are aware of it.
I think they're actually lessaware of it this time.
So if we roll the clock backagain two years, uh people might
remember it was previouslycalled Entrepreneurs Relief for
a long time.
It basically got changed tobusiness asset disposal relief,
but it was the same reliefreally, which was renamed.
And for a long time, that ratewas 10%.
(21:40):
So that was on any gains youwould make on the sale of
businesses.
So shares generally, if you'vesold your business or you've
sold a shares in a business, youwould pay business assets
disposal relief rates up to thefirst million pounds of gain you
made.
Uh and for a long time that was10%.
And two years ago theyannounced it was going to go up
(22:00):
to 14%.
Uh and they did that, and itwould have been October,
November 2024.
And there was a real panicamongst people because I think
it came off the blue a littlebit to try and make sure that
the businesses were sold andthings were done before the 5th
of April 2025.
Now the same level of increasehas happened again as we've just
passed the tax year, so it'snow gone from 14% to 18%.
(22:21):
There didn't seem to be quitethe same urgency about it as
there was 12 months ago.
Don't get me wrong, I spoke toa lot of solicitors and they'll
tell me they worked a lot oflate nights to make sure them
deals went over the line beforethe 5th of April.
Um, and that's fantastic.
But what what was interestingactually, a conversation I had
with it with a few colleaguesand a couple of solicitors
actually was that people werevery driven by the fact that
(22:42):
they wanted to make sure theygot like got that 4% saving from
the BADR.
And I completely understandthat, you know, 4% on a million
pounds you know, it's a lot ofmoney.
So actually, you know, if thatif that deal is going to drift
into the new tax year, you'reable to maybe make profits of
another month or two.
And then don't forget as well,once you creep into this tax
year, you've then delayed thepayment of the capital gains tax
(23:04):
by 12 months.
So if you have made managed tomake an extra bit of profit from
the business within them twofirst two months, you make good
gain on the sale of thebusiness, and that money's been
sat in an investment fund or abank account, then you know it
will attract interest.
And actually, by having accessto that money in an ICER or an
investment account for twelvemore months, the level of
(23:26):
interest and returns you get onthat might pretty much cover the
extra tax you're paying incapital gains tax.
So I think it's not quite asbad as people maybe thought of
if anyone missed that fifth ofApril deadline, you know, I I
don't think you need to tooverly panic.
Dr James (23:40):
Yeah, a hundred percent.
I would agree.
I would agree with that.
Absolutely.
So yeah, that is a little bitof a recap onto uh recent
changes in BD VIDR which havejust kicked in.
And I know there's no moreupcoming changes planned on that
front, is there?
Not anything we have to beaware of.
Speaker 1 (23:55):
Not that I'm aware of.
To be honest, one of the thingsthat they have touched
businesses a lot recently.
So I think they'll probablyhopefully leave businesses
alone.
But you know, as mostaccountants do, we do a lot of
tax plan, James.
And one thing I'm alwaysconscious of is that we we do
tax planning based on today'srates.
Dr James (24:09):
Yeah.
Speaker 1 (24:10):
And we come up with a really good plan that'll save
loads of money to maybe sell thebusiness in 10 or 15 years'
time.
But as you know, you know, asthem rates move over the years,
something like business assetdisposal relief could be could
be up for discussion to get inthe future.
Dr James (24:23):
Well, to put things in context, when it was
entrepreneurs relief, I believeit was only 10% tax on the first
10 million, right?
Well, that's correct, yeah.
So it's really, really and nowit's 18% tax on the first 1
million.
So it's it's only only up tothe first one million.
And then CGT kicks inafterwards, which again segues
(24:44):
us very nicely onto CGT, whichwe also wanted to talk about.
Speaker 1 (24:48):
Yeah, exactly.
And that 18% rate is now justaligned with the basic rate of
capital gains tax as well.
So anyone who's a basic ratetaxpayer, they would pay 18%
capital gains tax.
Anyone who's a higher ratetaxpayer is now paying 24%
capital gains tax, and that'swhere business asset disposal
relief doesn't apply.
Dr James (25:07):
Interesting.
So there's only really a 6%saving there.
It is, yeah.
I say really like that's youknow completely ignorable.
Like that's obviously areasonably that's that can
amount to a lot of money,especially when it's a business
sale on the table, right?
But it's like it's not like amillion miles away at the same
time, right?
Speaker 1 (25:25):
So it's all relative, isn't it?
You know, if you're makingsmall gains on some stocks and
shares, then six percent is notvery much.
But if you're a successfulpractice owner and you're
selling your business and you'vegot a million pound gain, then
six percent, you know, it's it'ssix thousand pounds.
Dr James (25:38):
Sure, 100%, 100%.
But that's why that's why welike our pensions and our ISIS,
right?
Because it obviously sheltersit from all of this business and
your dividends tax as well.
Matthew, have we done a greatjob of summarising all the
changes that have kicked in?
Speaker 1 (25:51):
Yeah, fantastic.
Yeah, I don't think we'vecovered most of the main ones
there.
I'm trying to think of anythingelse really I wanted to kind of
discuss.
Uh there's a couple of upcomingchanges I was going to mention
for next year.
Dr James (26:00):
Well, that's that's what I was gonna say.
If we've covered all of thisyear's changes, then definitely
we want to cast our cast ourcast our conversation onto the
future so that people know whatthey need to be aware of in the
next tax year.
Speaker 1 (26:11):
Yeah, definitely.
So, you know, as as tax rateschange from 6th of April 2027,
any kind of planning needs to bedone in advance of that.
So I think it's reallyimportant just to be aware of a
couple of the changes coming up.
So the first one I was going totalk about was the ISA limit
changing.
Yes, because this was mentionedin the budget, and it was very
unclear really what was going tohappen in terms of how they
would limit things.
It was always planned they weregoing to make a bit of an
(26:32):
adjustment to the to the rules,but at the time it wasn't 100%
clear.
So you know, we can bring a bitof clarity to that now.
So from April 2027, the cashICE limit is going down from
£20,000 to £12,000.
Well, that is only affectingpeople under the age of £65.
So if you're a of pension age,you can still put more into your
(26:54):
cash ICEs, it's just for thoseunder £65.
But the overall ICE forallowance is still £20,000.
So what that would mean is thatof that £20,000, £12,000 can be
put into a cash ICE, whichwould mean that you'd have to
(27:15):
put £8,000 into a stocks andshares ICE.
And the idea of that was thatthe government think that
encouraging people to put moneyinto stocks and shares is going
to help drive the economyforward.
And as well, it's a little bitsofter.
I think the original plan wasto really reduce that cash ICE
limit.
So I think they have been alittle bit softer on this.
And again, this is just forpeople under the age of 65 as
(27:36):
well.
So if you have sold a businessor you've got pensions being
paid out, you can still use yourfull £20,000 cash ISA limit if
you're above the age of 65.
Dr James (27:45):
You know, as much as we like to give the government
stick, I uh can actually see thelogic in that one a lot.
And I actually don't thinkthat's a horrendous idea,
basically, because I think thatcash houses do have their place,
but I think that people lean onthem and rely on them a lot
more than they should do.
Whereas if they had the rightknow-how when it comes to
(28:07):
investing, how to select a goodfund, etc., they really when
they knew that and they madedecisions through that lens,
they'd probably, as a generalrule of thumb, be putting a lot
more into the stocks and sharesISIS anyway.
Speaker (28:21):
Yeah, I agree 100%.
Speaker 1 (28:23):
I think when you look at kind of the growth of sort
of stocks and shares versus justinflation, then stocks and
shares have always kind ofoverachieved and beat kind of
inflation, really.
So it is a kind of sensiblelong-term investment, but that
generally speaking it needs tobe a long-term investment as
well.
It can't be something you kindof dip in out dip in and out of.
Dr James (28:43):
100%, 100%.
But yes, anyway, that wasthat's that's definitely
something to be aware of.
Speaker 1 (28:51):
And the other one I really want to touch on, really,
again, was um there's been alot of talk around sort of
inheritance tax changes.
Um and the one that mightaffect a lot of dentists in
particular is that historicallypension funds weren't part of
inheritance tax calculations.
So a lot of sort of IFAs wereit would encourage clients to
put money into the privatepension, you know, just to ring
(29:13):
fence it, if nothing else, frominheritance tax.
Now, the the good news, Isuppose, is that generally
speaking, the NHS um pensionwill be kept separate to this
rule change.
So we've got NHS dentists outthere, there's no need to kind
of get with a complete panic atthe moment, but it will affect
people who have got privatepensions.
So, as you know, James, privatedentistry over the last few
(29:35):
years has just took offmassively.
And that has meant that peoplehave had to set up private
pensions um to replace their NHSpensions.
So there'll be a lot of a lotof listeners out there who will
have sizable private pensionfunds and they will get pulled
into possibly inheritance taxfrom April 2027.
So it's really important tomake sure they're getting the
(29:57):
correct financial advice onthat, and if nothing else, it's
literally just something to havea conversation with their with
their financial advisor about.
unknown (30:04):
Yeah.
Dr James (30:05):
And make sure they're doing the best pension planning
plan.
They weren't previously part ofyour estate, right?
But now they are.
But it just shows you, right,the the the thing uh that can
sometimes you're you're whenyour money is in the pension,
it's in the pension, right?
And it's kind of at the behestof the government if they want
to change the rules.
Like another one, another oneis um there is presently no
lifetime allowance, right?
(30:25):
But yeah I would wager a greatdeal of money that that's gonna
come back in our lifetime atsome stage, right?
And we're talking on those timeframes, which is lifetime,
because a pension is for lifeand it's long term.
Uh so whilst I definitelydon't, you know, there's there's
definitely a time and a placefor a really good pension, of
course.
Uh it's also just important toremember that these things can
(30:47):
be honey traps a little bitsometimes.
So just the more you know, thebetter, right?
The more educated you are, thebetter decisions you can make.
Speaker 1 (30:54):
And that's it.
And sometimes it's it's justmaking sure.
I like to tell people if I giveyou an awareness of something,
it triggers a conversation.
If you have no awareness of it,you wouldn't think to maybe ask
the question in the firstplace.
Dr James (31:05):
Exactly.
And that's literally the wholepoint of this podcast, etc.
Any other changes we need to beaware of?
Speaker 1 (31:10):
So they're probably the main ones uh for the time
being that are affectingaffecting dentists, if I'm
totally honest.
Um, I'm sure there'll be thingsin this of the next budget that
will have an impact from April2027 as well.
Dr James (31:23):
Sure.
Okay, well, on that note, thenwe like to keep these podcasts
powerful, impactful, and punchy.
So maybe now is a good time.
Matthew, if you want to shoutyourself out, it's completely
okay to do that because you'vebeen so generous with your time
and knowledge.
If anybody wants to pick up aconversation with Matthew about
anything they've heard today,Matthew, where are they best off
finding you?
Speaker 1 (31:41):
So they can drop me an email at Matthew.nawson at DJ
H dotco.uk.
Uh, if you want to find outmore information about myself
and our services at our company,um go to our website DJH and
you can get in touch with usfrom there as well.
The new financial year is upon us, and the purpose of
this podcast today is to recap alot of the things that are
coming reasoning that usdentists need to be aware about,
and also some of the thingsthat are upcoming in forthcoming
tax years, forthcoming newfinale.
I'm joined by professionalaccountant Mr.
Matthew Norton from DJE, wherewe're today to talk about every
(02:04):
single tax change that usdentists need to know so we can
be prepared and ensure thatwe're as tax efficient as
possible.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
Smart Money Members Club alsoincludes multiple mini courses
and webinar series on financefor dentists, including how to
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(02:25):
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Please use the link in thedescription to claim your
(02:46):
verifiable CPD for this episode.
Matthew, let's talk about whattax changes dentist to be aware
of that have just kicked in,given that we're now in new the
new financial year, which is ofcourse at the time of recording
(03:07):
on this podcast, April the 6th,2026, up until April the 5th,
2027.
So yeah, probably a good placeto begin.
A little bit of a recap, if youwill, because m a lot of people
out there will be aware ofthese things because there'll
have been changes that have beenimplemented at recent budgets.
So what will we now see kickingin?
Speaker 1 (03:29):
So I think it's important to set the scene,
James.
So if we think about this timein sort of the autumn after
Rachel Reese gave her budget, Ithink that the line of cap
hearing was it wasn't quite asbad as we thought it was going
to be.
At the time, there was a bit ofgood news just before the
budget was announced.
And I think it's important toremember when we look at the
budget and we talk about thebudget, it's not just a budget
(03:49):
for the next 12 months.
The idea of the budget is it'sworking towards sort of longer
term goals for the government,usually on a kind of five-year
cycle.
So some of these sort of lessertax rates and then sort of the
less bad news, if you like, hashappened simply because they
thought their projections may bea little bit better.
Now, obviously, if certainthings happen in the environment
(04:11):
we're in, such as the Irancrisis at the moment, that can
scupper the plans.
So the feeling I got lastbudget, as I said, was it wasn't
as bad as we felt it was goingto be.
But if things carry on as theyare, growth in the UK is is
struggling.
We might see some more taxchanges coming up in the next
couple of years to be aware of.
Now I think look at the bigpicture as well.
(04:34):
Sort of obviously the big onewe talk about is sort of the
stealth tax rises, if you like.
So the stealth tax rises orfiscal drag, as people sometimes
refer to it as, or the factthat there's no major changes in
income tax, national insurancethis year.
And some people see that as agood thing, but effectively,
with inflation, as people'searnings go up, more and more
(04:56):
people are going to be pulledinto higher rate of tax, uh, the
higher rate tax band of tax at40%, additional rate tax at 45%,
and more commonly as well, withmost with most dentists now,
they are breaching that £100,000threshold.
And if people are familiar withthat, once you breach a
£100,000 level of income, youstart losing your personal
(05:17):
allowance.
And also, if you do have kids,you can potentially use as well
your tax-free childcare, whichcould be a real a real benefit.
So them freezes themselves areanother form of sort of fiscal
drag and sort of a negative,really, if you like.
Dr James (05:31):
Yes, can't overstate that enough because it's it's
yeah, it needs to uh I ideallyit would move uh in accordance
with inflation or like theofficial figures.
But you might know this off thetop of your head.
When was the last time theyactually changed those tax
rates?
Because it's been quite awhile, hasn't it?
Speaker 1 (05:48):
Yeah, I think it was 2021, it was under the
Conservative government.
And at the time it was quite acontroversial thing if people
remember, because every yearthat this person allowance would
generally increase and creep upwith inflation slightly.
Um, but I think because ithappened so long ago now, James,
that people are just taking itas the norm and you know, sort
of expecting it to happen whenyou know it's it's frozen now
until 2030.
(06:08):
But I can't really emphasizeenough how much of an impact
that's having on people's um taxand reduction in their post-tax
earnings.
Dr James (06:16):
And what about, and you'll know more about this than
me, but what about nationalinsurance bans as well?
Are they also frozen?
Speaker 1 (06:22):
Yeah, they've been frozen again as well.
And from last year, if youremember, uh employers' national
insurance crept up to 15% aswell.
So, again, another impact onbusinesses.
Minimum wage has gone up againthis year as well.
I was gonna touch on that alittle bit later, but I'll bring
it in now.
Again, minimum wage has gone upby about another four or five
percent.
And sometimes as well, peoplethink minimum wage, they think
(06:44):
of just the people who are kindof on that lower level of pay.
Well, actually, all of asudden, if you've got to
increase the people at yourbusinesses who are on the lower
level of pay, everyonerealistically needs to be pushed
up to the same level forfairness.
So actually, you know, it doesimpact salaries across across
the business.
Dr James (07:01):
Yeah, yeah, 100%.
Anyway, not to not to steal theshow and derail the
conversation, but yes, anyway,you're in full flow there.
So income tax brackets, incometax bans, and then other changes
that we should be aware of.
Speaker 1 (07:13):
Yeah, so I think everyone's sort of aware of this
one already, but the big one atthe moment as well, that's been
in the news over the last fewweeks, is is a bit of posity, I
suppose.
Um the government haveannounced that they are capping
interest rates on class twostudent loans for this financial
year and this academic year.
So a little bit of good newsthere, obviously, with sort of
the danger of inflation andinterest rates increase there
(07:34):
with the with the Iran war.
Um that's a little bit of goodnews for anyone with a with a
with a plan two student loan.
Dr James (07:41):
Yeah, absolutely.
Because previously, for peoplewho uh don't know this, I
believe it's linked to CPI,isn't it?
Speaker 1 (07:48):
Yes, it is, yeah.
CPI.
And as that as that increases,obviously that the interest rate
increases, and um you know mostpeople who are coming out of
the university will have plantwo student loans at a high
level, and the level of interestcan be can be sizable.
Dr James (08:02):
Can you give us an idea?
Maybe you know this off the topof your head, who just what
demographic of people are onplan two loans, like what era
would that apply to?
Speaker 1 (08:10):
Yeah, sure.
So is anyone who would havestarted the studies after 2012?
Dr James (08:15):
Right, I see.
So some of the some of the theyoung I've just missed out on
that then because I was 2011.
But then I I did get in whenthe when the when the the uh
maximum fees were still threegrand a year, so I can't.
Speaker 1 (08:25):
I know it it's gone crazy.
You know, I see obviously taxreturns for my clients, and I've
had a situation just to try andget it, kind of show how the
how how bad the interest ratesare at the moment on these
student loans.
I had a client contact mebecause they didn't think that
their student loan payments hadbeen transferred from HMRC to
the student loans company.
So you sent me the student loanstatement to have a bit of a
look at, and all that hadhappened is the level of
(08:48):
repayment they had made had justsimply covered the interest in
the year.
The actual balance of thestudent loan hadn't it decreased
at all, it just literallycovered the interest.
Dr James (08:56):
Oh no.
Speaker 1 (08:57):
And this is someone earning over 60,000 pounds a
year.
So we're not talking about youknow small, you know, small
earners, we're talking aboutkind of your most average
associate in the first couple ofyears.
Dr James (09:05):
There we go, crazy.
Okay, well, some somepositivity in there somewhere.
Speaker 1 (09:11):
Definitely.
And moving on as well, I thinkagain, you've done podcasts on
this previously and things, butuh obviously the big change
really that you know, thebiggest behavioural shift, if
you like, in tax for dentists inin my lifetime at least, is
this change to making taxdigital.
And I know you've done a lot onit already, so I won't sort of
go on about it too much, butobviously just make anyone aware
(09:31):
anybody whose self-employedturnover was in excess of
£50,000 in their 2024-25 taxreturn, I've been pulled into
it.
And obviously, we've gone livewith it now.
Um, effectively, we need to getclients on making tax digital
compliance software and makesure that their quarterly
returns are being submitted ontime.
Dr James (09:53):
Nice, and you know what, just quick opportunity
shout out.
There's uh we have done contenton making tax digital.
Uh, however, I'm gonna do awebinar, another webinar very,
very, very soon uh with someamazing accountants, which is
gonna talk about what you can doif you've missed the boat and
also even people who have uhupdated their making tax digital
(10:13):
or you know who feel likethey're on top of it, what to do
to ensure that you arecompliant and that there's no
issues going forwards.
So, yeah, shout out thatwebinar just while we're on the
topic.
Yeah, I'll announce the detailsof that in the mailing list in
the Facebook group very soon.
Speaker 1 (10:27):
Yeah, so so so important.
They have they have announcedunofficially that there's
there's gonna be no sort ofpenalties this initial year.
Um, but obviously people wantto get in good habits with it
straight away.
Um it's not it's no good, youknow, going to your accountant
the day before the deadline andthe submission is due and kind
of asking them to kind ofregister you and and sign you
for software, it needs to bedone in a timely manner and make
(10:48):
sure everyone's got time to dowhat they need to do.
As I said, with making taxdigital, it is the biggest
behavioural shift in tax fordentists in years.
And as James mentioned there,he's got another webinar on it
coming up, so it's uh I wouldsteal his line like too much on
that one.
And I'll I'll I'll move on tosomething that's probably gonna
(11:09):
affect people more than yourealise, and that's a change in
the dividend tax rates, James.
Dr James (11:14):
Yes, yes.
I recall this coming in, butyeah, I'm I'm interested to have
a little bit of a recap fromyou.
Speaker 1 (11:19):
Yeah, sure.
So what it means is that fromthe 6th of April, uh basic rate
taxpayers are now paying 10.75%on the first 30 uh the first
section of basic rate band ofdividend income.
Historically that was 8.75%.
And then your higher ratetaxpayers are going to be paid
35.75%, whereas previously theywere paying 33.75%.
(11:42):
Now, you know, two percentagepoints doesn't sound like a
great jump, but when we'retalking of you know sort of tens
of thousands of pounds, and insituations where the margins
have been squeezed and squeezedover the years on limited
companies and the tax efficiencyof them, it again just sort of
adds to the headaches a littlebit, and that sort of classic
(12:02):
salary and dividends model isgetting squeezed more and more.
And I think it's just more andmore important to actually
making sure that people arehaving the right conversations
with their accountants to makesure that how they're being
remunerated is the best is itbeing done so in the best
possible way.
In some situations, it might bebetter to take a higher salary
than dividends.
I think for the time being,we're still keeping with the
(12:22):
main model of paying adirector's salary, usually
around 12 and a half thousandand topping up that with
dividends.
But I always say that each caseneeds to be judged on its
merit.
Dr James (12:33):
And yeah, and as you say, it's it's contextually, you
know, where how how much israised over the years.
I I even remember, yeah, it wasnot too long ago, it was seven
and seven and a half percent,wasn't it?
I believe on the basic rate.
And that was only like threeyears ago, and now we're on ten
and a half, and that's yeah.
So basically it's actually 50%more if you think about it,
right?
Speaker 1 (12:53):
Yeah, and the difference allowance as well,
you know, years gone by thedifference allowance started at
£5,000 before you paid any tax,and now that's right down to
£500.
Dr James (13:03):
Seriously, I think I had it in my head it was two,
was it two recently?
Speaker 1 (13:06):
Yeah, I think it went from five to two to one to five
hundred pounds, is where we aretoday.
So it brought it down graduallyto hope you don't realize as
much.
Jeez.
Dr James (13:15):
Anyway, okay, well, yeah, let's not dwell on that
too much.
Moving swiftly on, somethingI'd rather really not think
about.
Speaker 1 (13:21):
But anyway, I but I think that I think the main
thing people need to look at aswell is that with the dividend
rates going up, actually, dothey need as much money out of
the company as they currentlyare taking?
Because, you know, if you'renot needing that money out of
the company to live off, youknow, I'm not saying live off
beans and toast for the rest ofyour life, you know, you need to
want to live your lifestyle andbe able to go on holiday.
But if you can leave more moneyin the company, you are going
(13:43):
to pay less tax on itpersonally.
You know, that money could bethen be used for other
investments, it could be used toput into private pensions.
And we've seen a lot moreclients these days actually use
things called family investmentcompanies.
And family investment companiesare where you might have family
members who are shareholders,and the main purpose of that
(14:04):
company is to make investmentsand bring kind of family family
into it.
And what that means is it meansthat money isn't kind of
leaving the company and beingtaxed on the individual, it's
being kept in the company, butbeing used maybe investments,
maybe a buy-to-left property,stocks and shares, investments,
and things like that.
And that model tends to workquite well where you have maybe
a holding company above yourtrading company, because when
(14:27):
you pass dividends from thetrading company up to the
holding company, that istax-free because that's tax
neutral.
But it means the holdingcompany then could maybe loan
money to another company or makeits own investments.
Dr James (14:40):
Yeah, of course.
And again, that's actuallysomething we really need to do a
podcast on when the Dennis WhoInvest podcast is family
investment companies.
But yes, good stuff.
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Speaker 1 (16:38):
Yeah, and also as well, I think there's still talk
of uh another 2% increase intax for landlords as well,
possibly next year.
Um so again, if you're able tobuy property inside a limited
company, you'll be exempt fromthe extra 2% uh tax as well.
Dr James (16:53):
How would that work?
You mean on the income fromproperty on the income, yeah.
Speaker 1 (16:57):
So it's it's kind of non-earned income, so possibly
savings income and rentalincome.
Um an extra 2% as has beentalked about.
Interesting.
Dr James (17:05):
Yes, but of course that wouldn't apply.
It would be uh it would becorporation tax if it was in a
company.
Speaker 1 (17:10):
Yes, so you'd be exempt from that, you're paying
corporation tax.
Yeah.
And then as I said, the money'sbeing capped in the company.
Maybe family members areshareholders, and you can pass
some wealth down uh to otherfamily members as well.
Good stuff.
And one thing I do find usefulas well is we I think we've
spoken before about sort ofelectric cars and company cars.
And the the company cars are agreat tool because the tax
(17:34):
breaks on them are reallygenerous at the moment still.
If you're a member of this timelast year, James, that
originally we we'd call firstyear allowances on 100% new
unused electric cars was goingto be scrapped from March 2026.
The government did a bit of aU-turn as they as they do in the
last budget and pushed thatdate back until April next year.
(17:54):
So anyone who's looking atelectric cars, you still have
another 12 months to look atcompany electric cars and get a
full 100% first year allowancesin that that year of purchase.
Dr James (18:05):
On new and unused electricity.
Is there any tax relief on uhsecondhand?
Speaker 1 (18:13):
Uh secondhand, you'll still get what's called writing
down allowance.
So writing down allowance aswell, again, a bit more
negativity has just beenreduced.
So for a long time, writingdown allowance was 18%.
And what that effectivelymeans, you get 18% of the value
off each year until the value ofthe vehicle is written down to
nil effectively, or more likelyyou've sold the car.
(18:35):
But that rate is now reduceddown to 14%.
Dr James (18:40):
Right, understood.
So there is there is some levelof tax relief on.
Speaker 1 (18:43):
Yes, it's still available.
But the big tax relief for meis a bit of a stealth tax relief
again, in a sense, that becauseyou get that tax relief upfront
for everyone to save yourcorporation tax, but that is
then replaced with what's calledbenefit in kind tax.
So anyone out there who's got acompany car might be aware of
this already, but you'll bepaying what's called the benefit
in kind tax on the benefit, ifyou like, of owning a company
(19:06):
car and having access to acompany car.
And that benefit in kind tax isbased purely around the list
price and the CO2 emissions.
So the more the lower the CO2emissions, so the more sort of
friendly the car is to theenvironment, the less tax you'll
pay.
Dr James (19:21):
Interesting.
But if that's a if that's anelectric car and there's zero
emissions, yeah, then there isno benefit in kind tax, right?
Speaker 1 (19:30):
So there'll be a small benefit in kind.
I think the rate this year isto now four percent on the less
price of the car.
Dr James (19:36):
Right.
Speaker 1 (19:36):
Yeah, but as the CO2 emissions increase, that
percentage increases.
So by the time you get to a uhan ice and ice big gas cruzzling
range where you would say,yeah, you could be paying
benefit in kind tax and maybe40-45% on the on the original
value of the car when it wasnew.
Sure.
And at that point, it doesn'ttend to be tax efficient to have
a company car.
Dr James (19:55):
That was literally the next thing I was going to say,
because it's uh from what theaccountants tell me, you know,
everybody's obsessed withputting things through their
business, right?
But actually, there comes apoint where in certain
situations you're better offjust buying it in a personal
name and a personal name.
Same with assets as well, likeowning, I believe it's uh
watches and art, they're knownas chassels.
Is that correct?
Yes, yeah.
(20:15):
Yeah.
And if you own them in apersonal name and you sell them
on, there's no CGT.
Speaker 1 (20:19):
Yeah, it's correct.
As earners wasting shuttles,where effectively you've got a
sort of lifespan, if you like,um, where kind of investments
would have no lifespan andthere's a capital gain on it.
Things that are kind of likeracehorses, for example, are
another one that's classes awasting shuttle.
Um, and then effectively,because it's got a smaller
lifespan, um, there's no capitalgain stacks on them items.
Dr James (20:40):
That's why, and not to get into sort of uh too too too
far down this rabbit hole, butextremely wealthy people always
buy art, right?
Because you're converting yourmoney into a tax-free asset,
which is hopefully going toappreciate with time, and
there's no CGT lab, orespecially if you have the money
in a personal name.
But yeah, that's that's whythat happens, and that's why
that's kind of a a thing.
Uh that's why it's sort of uhpeople people talk about that,
(21:03):
don't they?
Or it's like a recurring themein TV shows that rich people do
that.
And I learned that recently, orwell, you know, over the like
maybe a few years ago, I learnedthat I was like, oh, so that's
why that happens.
But anyway, that brings usnicely on to the next thing we
plan to talk about, which wasCGT and B A D R.
Speaker 1 (21:19):
Yeah.
So again, this is a really bigone.
I think again, it's been in thenews, people are aware of it.
I think they're actually lessaware of it this time.
So if we roll the clock backagain two years, uh people might
remember it was previouslycalled Entrepreneurs Relief for
a long time.
It basically got changed tobusiness asset disposal relief,
but it was the same reliefreally, which was renamed.
And for a long time, that ratewas 10%.
(21:40):
So that was on any gains youwould make on the sale of
businesses.
So shares generally, if you'vesold your business or you've
sold a shares in a business, youwould pay business assets
disposal relief rates up to thefirst million pounds of gain you
made.
Uh and for a long time that was10%.
And two years ago theyannounced it was going to go up
(22:00):
to 14%.
Uh and they did that, and itwould have been October,
November 2024.
And there was a real panicamongst people because I think
it came off the blue a littlebit to try and make sure that
the businesses were sold andthings were done before the 5th
of April 2025.
Now the same level of increasehas happened again as we've just
passed the tax year, so it'snow gone from 14% to 18%.
(22:21):
There didn't seem to be quitethe same urgency about it as
there was 12 months ago.
Don't get me wrong, I spoke toa lot of solicitors and they'll
tell me they worked a lot oflate nights to make sure them
deals went over the line beforethe 5th of April.
Um, and that's fantastic.
But what what was interestingactually, a conversation I had
with it with a few colleaguesand a couple of solicitors
actually was that people werevery driven by the fact that
(22:42):
they wanted to make sure theygot like got that 4% saving from
the BADR.
And I completely understandthat, you know, 4% on a million
pounds you know, it's a lot ofmoney.
So actually, you know, if thatif that deal is going to drift
into the new tax year, you'reable to maybe make profits of
another month or two.
And then don't forget as well,once you creep into this tax
year, you've then delayed thepayment of the capital gains tax
(23:04):
by 12 months.
So if you have made managed tomake an extra bit of profit from
the business within them twofirst two months, you make good
gain on the sale of thebusiness, and that money's been
sat in an investment fund or abank account, then you know it
will attract interest.
And actually, by having accessto that money in an ICER or an
investment account for twelvemore months, the level of
(23:26):
interest and returns you get onthat might pretty much cover the
extra tax you're paying incapital gains tax.
So I think it's not quite asbad as people maybe thought of
if anyone missed that fifth ofApril deadline, you know, I I
don't think you need to tooverly panic.
Dr James (23:40):
Yeah, a hundred percent.
I would agree.
I would agree with that.
Absolutely.
So yeah, that is a little bitof a recap onto uh recent
changes in BD VIDR which havejust kicked in.
And I know there's no moreupcoming changes planned on that
front, is there?
Not anything we have to beaware of.
Speaker 1 (23:55):
Not that I'm aware of.
To be honest, one of the thingsthat they have touched
businesses a lot recently.
So I think they'll probablyhopefully leave businesses
alone.
But you know, as mostaccountants do, we do a lot of
tax plan, James.
And one thing I'm alwaysconscious of is that we we do
tax planning based on today'srates.
Dr James (24:09):
Yeah.
Speaker 1 (24:10):
And we come up with a really good plan that'll save
loads of money to maybe sell thebusiness in 10 or 15 years'
time.
But as you know, you know, asthem rates move over the years,
something like business assetdisposal relief could be could
be up for discussion to get inthe future.
Dr James (24:23):
Well, to put things in context, when it was
entrepreneurs relief, I believeit was only 10% tax on the first
10 million, right?
Well, that's correct, yeah.
So it's really, really and nowit's 18% tax on the first 1
million.
So it's it's only only up tothe first one million.
And then CGT kicks inafterwards, which again segues
(24:44):
us very nicely onto CGT, whichwe also wanted to talk about.
Speaker 1 (24:48):
Yeah, exactly.
And that 18% rate is now justaligned with the basic rate of
capital gains tax as well.
So anyone who's a basic ratetaxpayer, they would pay 18%
capital gains tax.
Anyone who's a higher ratetaxpayer is now paying 24%
capital gains tax, and that'swhere business asset disposal
relief doesn't apply.
Dr James (25:07):
Interesting.
So there's only really a 6%saving there.
It is, yeah.
I say really like that's youknow completely ignorable.
Like that's obviously areasonably that's that can
amount to a lot of money,especially when it's a business
sale on the table, right?
But it's like it's not like amillion miles away at the same
time, right?
Speaker 1 (25:25):
So it's all relative, isn't it?
You know, if you're makingsmall gains on some stocks and
shares, then six percent is notvery much.
But if you're a successfulpractice owner and you're
selling your business and you'vegot a million pound gain, then
six percent, you know, it's it'ssix thousand pounds.
Dr James (25:38):
Sure, 100%, 100%.
But that's why that's why welike our pensions and our ISIS,
right?
Because it obviously sheltersit from all of this business and
your dividends tax as well.
Matthew, have we done a greatjob of summarising all the
changes that have kicked in?
Speaker 1 (25:51):
Yeah, fantastic.
Yeah, I don't think we'vecovered most of the main ones
there.
I'm trying to think of anythingelse really I wanted to kind of
discuss.
Uh there's a couple of upcomingchanges I was going to mention
for next year.
Dr James (26:00):
Well, that's that's what I was gonna say.
If we've covered all of thisyear's changes, then definitely
we want to cast our cast ourcast our conversation onto the
future so that people know whatthey need to be aware of in the
next tax year.
Speaker 1 (26:11):
Yeah, definitely.
So, you know, as as tax rateschange from 6th of April 2027,
any kind of planning needs to bedone in advance of that.
So I think it's reallyimportant just to be aware of a
couple of the changes coming up.
So the first one I was going totalk about was the ISA limit
changing.
Yes, because this was mentionedin the budget, and it was very
unclear really what was going tohappen in terms of how they
would limit things.
It was always planned they weregoing to make a bit of an
(26:32):
adjustment to the to the rules,but at the time it wasn't 100%
clear.
So you know, we can bring a bitof clarity to that now.
So from April 2027, the cashICE limit is going down from
£20,000 to £12,000.
Well, that is only affectingpeople under the age of £65.
So if you're a of pension age,you can still put more into your
(26:54):
cash ICEs, it's just for thoseunder £65.
But the overall ICE forallowance is still £20,000.
So what that would mean is thatof that £20,000, £12,000 can be
put into a cash ICE, whichwould mean that you'd have to
(27:15):
put £8,000 into a stocks andshares ICE.
And the idea of that was thatthe government think that
encouraging people to put moneyinto stocks and shares is going
to help drive the economyforward.
And as well, it's a little bitsofter.
I think the original plan wasto really reduce that cash ICE
limit.
So I think they have been alittle bit softer on this.
And again, this is just forpeople under the age of 65 as
(27:36):
well.
So if you have sold a businessor you've got pensions being
paid out, you can still use yourfull £20,000 cash ISA limit if
you're above the age of 65.
Dr James (27:45):
You know, as much as we like to give the government
stick, I uh can actually see thelogic in that one a lot.
And I actually don't thinkthat's a horrendous idea,
basically, because I think thatcash houses do have their place,
but I think that people lean onthem and rely on them a lot
more than they should do.
Whereas if they had the rightknow-how when it comes to
(28:07):
investing, how to select a goodfund, etc., they really when
they knew that and they madedecisions through that lens,
they'd probably, as a generalrule of thumb, be putting a lot
more into the stocks and sharesISIS anyway.
Speaker (28:21):
Yeah, I agree 100%.
Speaker 1 (28:23):
I think when you look at kind of the growth of sort
of stocks and shares versus justinflation, then stocks and
shares have always kind ofoverachieved and beat kind of
inflation, really.
So it is a kind of sensiblelong-term investment, but that
generally speaking it needs tobe a long-term investment as
well.
It can't be something you kindof dip in out dip in and out of.
Dr James (28:43):
100%, 100%.
But yes, anyway, that wasthat's that's definitely
something to be aware of.
Speaker 1 (28:51):
And the other one I really want to touch on, really,
again, was um there's been alot of talk around sort of
inheritance tax changes.
Um and the one that mightaffect a lot of dentists in
particular is that historicallypension funds weren't part of
inheritance tax calculations.
So a lot of sort of IFAs wereit would encourage clients to
put money into the privatepension, you know, just to ring
(29:13):
fence it, if nothing else, frominheritance tax.
Now, the the good news, Isuppose, is that generally
speaking, the NHS um pensionwill be kept separate to this
rule change.
So we've got NHS dentists outthere, there's no need to kind
of get with a complete panic atthe moment, but it will affect
people who have got privatepensions.
So, as you know, James, privatedentistry over the last few
(29:35):
years has just took offmassively.
And that has meant that peoplehave had to set up private
pensions um to replace their NHSpensions.
So there'll be a lot of a lotof listeners out there who will
have sizable private pensionfunds and they will get pulled
into possibly inheritance taxfrom April 2027.
So it's really important tomake sure they're getting the
(29:57):
correct financial advice onthat, and if nothing else, it's
literally just something to havea conversation with their with
their financial advisor about.
unknown (30:04):
Yeah.
Dr James (30:05):
And make sure they're doing the best pension planning
plan.
They weren't previously part ofyour estate, right?
But now they are.
But it just shows you, right,the the the thing uh that can
sometimes you're you're whenyour money is in the pension,
it's in the pension, right?
And it's kind of at the behestof the government if they want
to change the rules.
Like another one, another oneis um there is presently no
lifetime allowance, right?
(30:25):
But yeah I would wager a greatdeal of money that that's gonna
come back in our lifetime atsome stage, right?
And we're talking on those timeframes, which is lifetime,
because a pension is for lifeand it's long term.
Uh so whilst I definitelydon't, you know, there's there's
definitely a time and a placefor a really good pension, of
course.
Uh it's also just important toremember that these things can
(30:47):
be honey traps a little bitsometimes.
So just the more you know, thebetter, right?
The more educated you are, thebetter decisions you can make.
Speaker 1 (30:54):
And that's it.
And sometimes it's it's justmaking sure.
I like to tell people if I giveyou an awareness of something,
it triggers a conversation.
If you have no awareness of it,you wouldn't think to maybe ask
the question in the firstplace.
Dr James (31:05):
Exactly.
And that's literally the wholepoint of this podcast, etc.
Any other changes we need to beaware of?
Speaker 1 (31:10):
So they're probably the main ones uh for the time
being that are affectingaffecting dentists, if I'm
totally honest.
Um, I'm sure there'll be thingsin this of the next budget that
will have an impact from April2027 as well.
Dr James (31:23):
Sure.
Okay, well, on that note, thenwe like to keep these podcasts
powerful, impactful, and punchy.
So maybe now is a good time.
Matthew, if you want to shoutyourself out, it's completely
okay to do that because you'vebeen so generous with your time
and knowledge.
If anybody wants to pick up aconversation with Matthew about
anything they've heard today,Matthew, where are they best off
finding you?
Speaker 1 (31:41):
So they can drop me an email at Matthew.nawson at DJ
H dotco.uk.
Uh, if you want to find outmore information about myself
and our services at our company,um go to our website DJH and
you can get in touch with usfrom there as well.
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