According to the latest HMRC tax regulations and guidance, here are a few of the ways that you as a dentists can save tax in the UK…..
Pension Contributions
Dentists can make pension contributions to reduce their taxable income. The maximum amount that can be contributed to a pension each year is £40,000, or 100% of earnings, whichever is lower. Pension contributions are made before tax, so they can significantly reduce the amount of tax that dentists have to pay.
Incorporation
Dentists can incorporate their business to reduce their tax liability. This means that the business will pay Corporation Tax on its profits, which is currently 19%. Dentists can then take a salary from the business, which will be subject to Income Tax.
However, the salary can be drawn at a lower rate than the profits of the business, which can save dentists money on tax.
Capital allowances
Dentists can claim capital allowances on certain assets that are used for business purposes. This includes things like equipment, furniture, and vehicles. Capital allowances can be deducted from taxable profits, which can reduce the amount of tax that dentists have to pay.
Business Expenses
Dentists can claim business expenses against their taxable income. This includes things like the cost of rent, utilities, and marketing. Business expenses can be deducted from taxable profits, which can reduce the amount of tax that dentists have to pay.
In addition to the above, there are a number of other tax reliefs and exemptions that dentists may be able to claim……
For example, you may be able to claim the Research and Development Tax Relief if you are developing new products or processes.
You may also be able to claim the Patent Box tax relief if they own patents.
It is important to note that the tax rules are complex and can change frequently. You should always seek professional advice from a qualified accountant (i.e. us !) to ensure that you are claiming all of the tax reliefs and exemptions that you are entitled to.
Here are some additional tips for dentists who are looking to save tax:
Keep good records of all of your business income and expenses. This will make it easier to complete your tax return and claim all of the tax reliefs and exemptions that you are entitled to.
Review your tax return carefully before submitting it. Make sure that you have claimed all of the tax reliefs and exemptions that you are entitled to.
If you have any questions about your tax return, or if you are unsure whether you are eligible for any tax reliefs or exemptions, please Contact Us Here.