Are you tied to the chair? Tax Advice for Dentists
A busy work schedule can often mean tax planning comes last on the long list of tasks involved in running your own practice. However, there are simple things to consider that can reduce your tax liabilities: By accelerating or deferring…
Blog13th May 2015
A busy work schedule can often mean tax planning comes last on the long list of tasks involved in running your own practice. However, there are simple things to consider that can reduce your tax liabilities:
- By accelerating or deferring expenditure you can manage your tax liability across two tax years. This could enable you to keep your income either below £100,000 so that you are entitled to the full tax free personal allowance or £150,000 where the 45 per cent tax rate applies.
- The current annual investment allowance, which enables you to get immediate tax relief for qualifying equipment purchases, is £500,000, however this will reduce to £25,000 from 1 January 2016. If you are considering significant capital expenditure, such as fitting out a surgery, if possible the costs should be incurred whilst the higher allowance is available.
- Where personal income producing assets are concerned, such as shares, bank accounts, or other investments, transferring these to a lower earning spouse can ensure that personal allowances and basic rate bands are fully utilised. A new personal savings allowance will also be introduced from April 2016 which will allow basic rate payers to receive up to £1,000 of bank interest tax free.
- Higher rate tax relief continues to be available on gift aid donations and personal pension contributions. They also reduce your income for the purposes of calculating your entitlement to a personal allowance, so the benefit can be two-fold.
Of course there are more complex tax planning ideas and self employed individuals, for example, can achieve significant tax savings by incorporating their business due to the difference between personal and corporate tax rates.
Incorporation can, however, affect entitlement to certain NHS benefits so needs careful consideration, but there is the potential for considerable tax savings on an annual basis.
For details of how our Private Client Team can help you, please call Jill Walker or Stuart Petrie on 01224 625 111