A cap on public sector pay awards will have a significant impact on dentistry, the British Dental Association (BDA) has warned.
In his Budget speech last week, the Chancellor of the Exchequer confirmed that the awards will not rise above one per cent for a period of four years.
There are fears the policy will affect NHS contract value uplifts, as well as the pay for hospital and community dentists.
In response to George Osborne’s announcement, the BDA made a strong case that yet more cuts in dentists’ net pay will further undermine morale and threaten the viability of some services.
Other Budget proposals likely to have implications for dentists include:
- Tax avoidance – There will be greater scrutiny of businesses suspected of incorporating to avoid paying tax. HMRC have already contacted some dental practices asking what their reasons for incorporation are and stating that income tax would be applied to ‘loans’ if the reasons were not found to be suitable.
- Property and inheritance – Dentists who own a property and rent it out stand to lose under the new Budget. Landlords who currently receive tax relief at 40 per and 45 per cent on their costs (including mortgage interest), will be restricted to claiming 20 per cent. However, dentists owning property will be able to rent out a bedroom and earn up to £7,500 tax free.
- Annual Investment Allowance – The Chancellor had previously signalled that the Investment Allowance would fall to £25,000, however, during this Budget; he admitted that small and medium-sized businesses had benefited. Therefore the allowance will be set at £200,000 permanently from January 2016.
National Insurance allowance – From April 2016, businesses will be given a £3,000 allowance for National Insurance contributions for their employees, this is an increase from the previous £2000. However, HMRC guidance says that public services are exempt from receiving this £3000. The tax authority has clarified that dentists with 50 per cent or more NHS income will lose out.