Dr James, 0s:

We need to talk about the budget, not just the things that moved around a few days ago, in March, but also the things that happened a few months ago, that are kicking in on April the 1st, and that's why I have specialist dental accountant with us today, Mr David Hossein. We're going to be talking about what's new, what's impending to kick in and also what dentists can do about it. I'm also super excited today to announce a brand new feature for the Dentists Who Invest. Dentists can do about it. I'm also super excited today to announce a brand new feature for the Dentist who Invest platform, and that is free verifiable CPD to all UK dentists who have enjoyed this podcast episode. Whenever you finish the episode, all you have to do is click the link in the podcast description. It'll take you right through the Dentist who Invest website. You'll be able to complete a short questionnaire and, once passed, you fill in your reflections and we'll go ahead and email over to you your verifiable CPD certificate, which is entirely free. What that means is this podcast episode will be able to contribute towards your verifiable CPD hours during this learning cycle. David, this information is fresh off the press. What do dentists need to know whenever it comes to the recent changes Only a few days ago, from Rachel Reeves.

David, 1m 11s:

Yes, hi, James, so literally yesterday, so still reading and processing. So it's not any kind of changes to the previous budget. So obviously in October we had the actual budget to the previous budget. So obviously in October we had the actual budget where there were no additional taxes raised to non or to workers I think that was the phrase they used but we did have tax thresholds frozen, so personal allowances and basic rate bands frozen, so with fiscal drag, that is a tax, an additional tax burden in every other kind of sense of the matter. The FRO's inheritance tax where they did make changes to tax was on employers or businesses, so national insurance for employers going up by 1.2%, as well as putting up the national living wage, so more relevant to practice owners, and, as I say, those are kicking in from the first of april. The spring statement has not changed any of those. There was a lot of noise made by the private sector and businesses around those two things because, well, it's bad for business when the wages bills go up. Often they have to make redundancies and a lot of companies and linkedin was all flooded by announcements of redundancies. Um, the knock-on impact of that, I think, has been that um growth forecasts for this year. Um, the obr previously estimated it would be 2% growth this year. Now they've revised that down to 1%. So that's kind of the context of this spring statement is, growth has been revised down. Inflation is expected to come in about 3.2 as an average for the year, compared to the government's target of 2%. So that's what the Chancellor's dealing with here. So no tax changes. So I thought that today we'll revisit the budget. Let's go over as a refresher. Don't forget this is what's happening in April. I think we will have to wait until October where there could be potentially actual more changes coming in October 2025, but we'll have to watch space for that. So kind of going with that. So october budget tax their souls have been frozen. Inheritance tax frozen. So living wage increased to 12.21 per hour. National insurance going up by 1.2 percent to 15 from april. Um, capital gains taxes is the area where they did make changes in October. So the main rate from 10% is going to 18%. So if you buy and sell assets and you're a basic rate taxpayer, instead of paying 10% you'll pay 18%. Most of our clients, as they are higher rate taxpayers. It will go from 20% to 24%. That excludes residential property and business assets. The other big one for practice owners is the changes to business asset disposal relief. So dentists who are selling a practice, that's a business asset that comes under capital gains tax and we have this relief of business asset disposal relief. The first million pound used to be taxed at 10%. That is going up to 14 percent on the first of april. So, as you can imagine, the last week of the tax year we've got a lot of people buying and selling businesses trying to get them over the line before the first of april to save this four percent increase. Um, so that that's yeah, that's interesting. V80 on school fees. Obviously we know that's kind of happened in January. I think that's also contributed a bit to the downgrading and the growth in the economy. So then, moving on to the actual spring statement itself so, as I say, growth has been halved. The forecast for this year the chancellor's aiming to balance the budget over a five-year period. So we are currently in a deficit and they would like to get to a surplus by 2030. So that's their stated objective. Whether they'll get there, obviously politicians like to over promise because it gets some votes. Let's see if they actually manage to do it after five years, but that's that's their stated objective at the moment. Um, they had previously announced that they were looking at welfare cuts. So in the budget that was that was announced they've gone further with that with additional 500 million pound worth of um cuts to welfare, targeting universal health and pit payments, and it's a bit sad to hear, but it's a part of life, I suppose, in an economy. But 250 000 people are going to be pushed into poverty, which includes 50 000 children, so that's not great and it's more of a reflection of, I suppose, the economy as a whole and how it functions. Other areas that they announced were and I thought this was politically interesting a reduction in overseas aid or an increase in defence spending, and I think the message there is that we've got a lot of volatility in the world so we need to increase defence spending. That will create jobs as well, so it kind of helps towards the growth beyond this year into next. But they're going to fund that mainly through a reduction in overseas aid, which might be, I think, a bit of a political angle to that as well. Bringing it to my world, the accountancy world, there are a few interesting announcements for the world of accountants. Payment penalties are going up. So if you pay your income tax bill late, the late payment interest penalties are going up to 10% from the 1st of April. So any of my clients listening, make sure you pay your tax on time, otherwise I can't help you. If it's a 10 penalty, I'm afraid. Um, what else we we have? We do know that hmrc has been given a lot of money to hire additional field officers and we're starting to see actually that, um, we're getting more investigations, so clients are being looked at and questions asked, and that's across the board because HMRC are trying to. So the government are using HMRC to build some of their budget through tax avoidance and evasions and for the last 10 years it was quite quiet, but they are starting to pick up now. Just random inspections and asking more questions quiet, but they are starting to pick up now just random inspections and asking more questions, and obviously it's uh, it's it's okay because dentists tend to be very good with their finances and it's just random inspections that you just deal with. But, um, that that's also been announced and it has been. We are seeing the effects of that, that more kind of spotting inspections on client records, making tax digital, which I have been very pessimistic about looks like it is going ahead. So this is where we'll have to do quarterly accounts going forward from next year. And it's been pushed back and pushed back, and pushed back to the point where I was starting to feel they just can't do this, they're going to abandon it. But we've had a letter from them saying, yes, it is going ahead and start getting clients ready for that. So again for my clients, we'll be working with you closely on how to prepare for that. Um, interestingly, hr.

Dr James, 8m 28s:

Sorry, go on, I was just gonna ask have I got this right? That's for sole traders, but not for limited companies it will come in for limited companies as well, right, okay, yeah, oh, I see so. So, as in the, in the immediate term, the one that they've messaged you about, that's the. That's for sole traders, but limited companies is at some stage in the future, right? They haven't kind of firmed that one up yet, have they?

David, 8m 51s:

correct. But if they do it for the one they will, they can't they can't not do it, come for the other, yeah yeah, they also announced that they're going to reduce the threshold for it as well. So it was only for a certain level of income, but they've dropped that down, so they really are keen for that to go ahead. They have ditched their own service for it, though. So, hmrc, we're going to give you a free software. They've now said no, we can't do that, you have to get your own. So that's, that's a bit more uselessness from them, um, which is not great. Um. So, in terms of tax changes, that's kind of where we are. As I say, as we get closer to april october 25 we will have the next budget, where I suspect we will have, um, additional changes. One thing that they did mention that they are looking at so, uh, we all need to be aware that that's them saying that there's probably something going to change here is around ices and, uh, the amount you can put into an isa, because they want to change the liquidity ratio in the economy. They want to encourage people to invest less in cash and more into stocks and shares, the idea being to stimulate the stock market. Um, that's their theory behind it, but whether that will actually happen if they change the iso limit, reduce it down. I don't think people put more money into the stock market, but it's it's. It's an idea that they are looking at, so potentially we could see changes around that in october interesting.

Dr James, 10m 18s:

So, with regards to the most recent budget, not so much has changed, but it's useful to have a reminder of the stuff that changed in the autumn budget, which are impending are going to kick in very soon. So thank you for that high level summary. If we were to just hone that down to dentists and what they can do over the next few months, have you got any thoughts on that front? To make this really specific to our audience?

David, 10m 45s:

yeah. So, as I say, first of april, we've got national insurance and living wage going up, so our practices are looking at their pricing and saying are we, are we priced correctly? Do we need to increase prices? What is the effect of these increases on our EBITDA? The dental market is very active in terms of buying and selling and I think this year it will pick up as well. So that's something for practice owners to be aware that what your EBITDA is might change and you need to understand by how much. And then do you need to respond in any kind of pricing way or other? Restructuring, whatever that means, for every single practice is different, and I think we are going to see an active M&A market this year. I think it's going to be interesting.