Is a dental accountant the right choice for you?
Sophie Kwiatkowski explains why a dental accountant might be a better choice for you than a general practice accountant.
We often get asked the question: ‘Why should I have a dental specialist accountant as opposed to a general practice accountant?’
The answer is simple. The dental industry is unique and having an adviser that understands the intricacies of the dental world, can be invaluable to you throughout your careers. Any accountant will know the rates of tax and national insurance, and how to prepare a tax return. By having dental specific expertise on your side – you can take comfort in the knowledge that you are in the best possible tax position and all the dental complexities have been considered.
There are several key points in time throughout a dentist’s career where the specialist knowledge can be invaluable. So, let us take a look at these in turn.
Shift from employment to self-employment
As a foundation dentist you will be in a salaried position, with your tax and national insurance automatically deducted by your employer. This means that you have never had a requirement to complete a tax return or think about taxes. Even as a salaried dentist you are entitled to tax relief on expenses that meet HMRC’s criteria of ‘wholly, exclusively and necessarily incurred in the performance of the role’. This means you can claim for items like professional subscriptions and indemnity insurance.
As you complete your studies, many of you will become self-employed and work as a dental associate. HMRC’s guidelines on allowable expenses are widened when you become self-employed as you are allowed costs that are required for the purpose of the trade. This means that training costs, dental materials and other expenses become allowable. PFM can provide you with its associates expenses guide to help ensure you are as tax-efficient as possible.
You will also need to register with HMRC as being self-employed, and start monthly record-keeping. As your tax will not be deducted monthly, you will need to grasp the tax system, and get into a routine of putting money aside each month towards your tax bill (which will include student loan repayments). This is where a dental specialist can help and guide you through the process, making it as simple as possible.
Becoming a practice owner
After a few years of being an associate the next milestone in your career may be the jump to buying a dental practice of your own. This is a complex area, and there are many pitfalls – having a dental specialist accountant’s guidance in this situation is of vital importance. Initially, you will want an understanding of whether a potential practice is affordable, and is a sound business investment. An accountant can look at the practice financials and pull together business forecasts, building in bank financing, to help you come to an informed decision as to whether the practice is profitable long-term.
In most cases, you will also need advice on how best to structure a practice to ensure you are in the most tax-efficient position, and having the specialist knowledge on board can be vital.
HMRC’s self-employment status challenge
You might have heard the buzz around the dental world regarding HMRC’s review of the engagement status of associate dentists. In this time of uncertainty with HMRC writing to individuals, having someone in the industry to advise you will be imperative.
PFM works with over 800 dentists, each with a unique working pattern. This variety means that we are sufficiently well-informed to deal with any challenges from HMRC.
Annual declaration of net pensionable earnings (NPE)
Each year as an NHS performer you will be required to declare your NPE to ensure that your superannuation is being deducted at the correct rate. This is a technical calculation, which a dental specialist accountant will be able to prepare for you, so you can ensure you are declaring the correct superannuable earnings each year.
The PFM group can help you with all services you may require as a dentist. From sales and valuations, to accountancy, to legal and financial advice – help is at hand.
For more information visit pfmdental.co.uk.