Clear and hassle-free advice for dentists
Clear and hassle-free advice for dentists.
Shipleys have been using their specialist knowledge in the Dental field for over 11 years.
We act for Dental clients of all sizes ranging from associates and single-handed practices to larger partnerships and corporates, as well as dental practice linked health clinics, hygienists and consultants and specialists (including orthodontists, endodontists, oral surgeons, and periodontists).
The health industry has seen a surge in growth in recent years, achieved against a back drop of challenges from fundamental reforms to the NHS. Dental practices need to be proactive in providing more of the advanced and enhanced services on top of the essential services to ensure a successful business.
- Dental Principals and Practices
- Dental Associates and Self Employed DCPs
- Tax planning services for Dentists
Dental Principals and Practices
At Shipleys Tax we understand the specific needs of dental practices and the partners involved. Wholesale reforms to the NHS mean dental practices need to re-position themselves in the new system and be able to devote maximum time to administration of patient care. That is where our team can help by providing specialist knowledge on your accounting and tax matters leaving you to concentrate on the patients.
Why do you need a specialist dental accountant?
• Knowledge of NHS general practice and the expert advice we provide can be instrumental
• Understanding how practices are funded by NHS England (formerly PCTs)
• Be familiar with the GDS/PDS provider contracts, the dental contract reforms and the impact of the NHS pension scheme
• Be up to speed on UDA values in practice and the developing primary care dental market.
• Deal competently and promptly with all taxation matters and with dentists’ superannuation.
We aim to do more than produce the annual accounts and handle the principals’ tax affairs.
Personal service – you will deal with one particular partner and their same support team and not be passed around
Timely – the annual accounts will be prepared to agreed time scales and we will visit the practice to discuss
Prompt – we will deal promptly with routine queries, telephone calls and emails and advise on bookkeeping, cash flow and monitoring partners’ drawings without making additional charges.
Tax planning – we will discuss ways to minimise your overall tax liability and spot opportunities.
We have nationwide coverage and are happy to come and visit you.
What out basic annual fee covers
• Annual accounts preparation.
• Meeting Principals to discuss draft accounts
• Partnership tax return and tax computation
• Advising on projected profits and tax liability
• Partners’ personal tax returns
• Ad hoc email and telephone queries
• Opportunities for tax planning for both business and personal affairs
We also advise on:
• Setting up a limited company for non-NHS or associate income
• Setting up a limited company and transferring the business tax efficiently
• Handling HM Revenue & Customs’ investigation into the practice
• NHS superannuation issues
• Specific tax planning strategies for reducing IHT, CGT and Stamp Duty
Dental Associates and Self Employed Dental Care Professionals (DCPs)
We have acted for Dental associates and Hygienists for many years and understand the needs of the dental profession.
What does the service include?
• How to register with HMRC
• How to set up and advising on Employed vs Self employed status and NIC implications
• Proactive advice on tax allowable business expenses, professional subscriptions
• Advice on employing a spouse
• Preparation of annual Accounts and tax returns for HMRC
• Advice on NHS superannuation issues
• Help with Student Loan deductions
• Ad hoc telephone and email advice
As well as providing accounting and income tax advice we can also advise on the following areas:
• Incorporation of your business via a limited company
• Impact on superannuation on incorporation
• Assist with raising finance from banks
• Dentists from overseas
• Inheritance tax planning
• Property tax planning
After a few years as an associate, many dentists look to acquire a practice of their own; we will handhold you through the whole process including:
• Most tax beneficial way to set up a practice of your own
• Reviewing target practice accounts and advising on matters that require further investigation or explanation
• Introducing clients to solicitors who experienced in dealing with the purchase of dental practices
• Introducing clients to banks who have specialist healthcare managers who understand the dental market and who can provide loans for practice purchases
• Advising on redundancy/staff issues on acquisition and payroll arrangements
• Advising about record keeping systems
• Advising about tax planning to ensure that the deal is done in the most tax efficient way
• Save you money – proactive services ensuring you are aware of tax savings
• Knowledge you can rely on – we have a wealth of tax expertise in the healthcare sector
• Planning – ensuring you are aware of tax liabilities and payment dates enabling you to plan your cashflow
• Peace of mind – we have many years of experience in dealing with the tax affairs of medical and hospital consultants
• Help you minimising risk of HMRC enquiry
• We have nationwide coverage and act for Dentist clients based throughout the UK.
Our basic fees are £395 + VAT for associates
Tax planning for Dentists
Tax law never stands still and goal posts are always moving. It is crucial that you have the right adviser to guide you through the maze and help reduce your tax bill through legitimate and transparent means.
Shipleys Tax has a number of specialist tax advisers with wealth of experience in the medical sector who can talk to you about the many tax saving opportunities.
We always say the best tax planning is done before a major event in the business so seek advice early on in the lifecycle of a transaction. Some areas to consider:
• Buying or Selling a dental practice – huge tax saving opportunities both personal and corporation tax
• Health clinic linked dental practices – most tax efficient trading structures
• Reduce inheritance tax on death
• Reduce stamp duty land tax on buying
• Offshore tax planning advice for certain businesses
• Provide property development strategies
• Use of EIS/SEIS and corporate venture vehicles
• Use of LLPs and corporate partnerships
• Asset protection and preservation of wealth
• Estate planning and succession
Latest news & blogs…
IT IS ANECDOTALLY REPORTED that due to the pandemic, birth rates are expected to rise. With estimates for children’s education to cost over hundreds of thousands, can setting up a trust for the benefit of children not only help save tax but also assist with child education costs?
In this article Shipleys Tax Advisers takes a look at some of the pros and cons of school fees planning and why planning and design is key to achieving the right outcome if you want to avoid an expensive HMRC challenge.
YOU SHOULD NOT ACT (OR OMIT TO ACT) ON THE BASIS OF THIS ARTICLE WITHOUT SPECIFIC PRIOR ADVICE. SHIPLEYS TAX PLANNING PROVIDES A BESPOKE TAX CONSULTANCY SERVICE AND CAN ADVISE YOU OF THE RIGHT COURSE OF ACTION.
Bank of (grand)Mum and Dad
Generally, the most common method we come across is the “grandparent solution”. This typically involves adult children (i.e. the parents) transferring shares to their parents (i.e. the grandparents). This is then transferred to the grandchildren (minors) directly or indirectly held via a type of trust arrangement. The idea being that beneficiaries (e.g. grandchildren) in these circumstances are likely to be minors and are unlikely to have other income, the trust arrangement allows them to use their annual tax-free allowances such as the personal allowance, savings rate allowance and dividend allowance.
The idea being that beneficiaries (e.g. grandchildren) in these circumstances are likely to be minors and are unlikely to have other income, the trust arrangement allows them to use their annual tax-free allowances…
This is a seemingly a perfect solution for grandparents who wish to transfer shares to the grandchildren where the donor is not a basic rate taxpayer or where the donor wishes to reduce the value of their estate for inheritance tax (IHT) purposes.
Sorted, you would have thought.
Well not quite, there are significant pitfalls which need navigating.
Is the income taxed on the minor?
The major problematic issue is that the income may not be treated as taxable on the minor. This type of planning is not straight forward and requires careful scrutiny of the settlements legislation and to ensure that there are no reciprocal arrangements in place.
Where parents are setting up trusts for their minor children anti-avoidance legislation can tax any income arising on the parents, so this method may not be tax efficient or indeed even work. In other words, there is a significant health warning with this planning which many are unaware of.
Gift of shares
Where the adult children gift interests in their business to their parents and these are subsequently transferred to the minor/s in quick succession, the transaction will be at a serious risk of a successful HMRC challenge which will result in the income being taxed on the parents.
Where parents are setting up trusts for their minor children anti-avoidance legislation can tax any income arising on the parents, so this method may not be tax efficient or indeed even work.
If, however, the transaction can be structured in such a way that the asset is given to the grandparents with no onward obligation/intention that the asset will be transferred to the minors, and if the shares are held for a reasonable period of time (i.e. where the probity of ownership cannot be in issue) and where certain conditions are met, or due to a change of circumstances, the grandparents of their own volition decide to gift the asset to the minors, this should not be subject to a successful challenge by HMRC. So, in reality it’s all a question of intention and timing. Get this right along with the surrounding facts and circumstances, then the prospect of having a successful fees planning increases.
Sale of shares
Where the grandparents acquire an interest in the parents’ business for full market value for/on behalf of the grandchildren, the anti-avoidance provisions do not apply. However, one will need to be mindful that the open market is actually paid and there are no reciprocal arrangements in place. The cost of this may be prohibitive due to the costs of asset, valuation and other professional fees.
If, however, the transaction can be structured in such a way that the asset is given to the grandparents with no onward obligation/intention that the asset will be transferred to the minors…
…this should not be subject to a successful challenge by HMRC.
COVID-19 Gifting income producing assets – a timely opportunity?
The grandparents could gift/acquire an income producing asset for the benefit of the minors and hold these on trust. This would typically be a bare trust – as opposed to a substantive trust mainly due to compliance and costs. However, this comes with a significant risk as minors (as beneficiaries) will have absolute entitlement and control of the business at the tender age of 18. The parent/grandparent may not wish for the minor to control these assets at such a young age.
It is said that a discretionary trust or an interest in possession trust may therefore be a more appropriate solution here due to its flexibility and control, and, unlike a bare trust, beneficiaries are not entitled to the assets of the trust upon attaining 18 years.
However, the tax anti-avoidance provisions apply here also. If the parents set up the trust with the intention to fund school fees, then a discretionary trust may not be a tax efficient option.
As such if income producing assets, for example stocks, shares or investment property, can be gifted/acquired by the grandparents for the benefit of minors, the income would be taxable on the minors and could go towards paying for their private school fees.
if income producing assets… can be gifted/acquired by the grandparents for the benefit of minors, the income would be taxable on the minors and could go towards paying for their private school fees.
With COVID-19, the valuations of income producing assets may be at a value which allows gifting without significant capital gains tax consequences, perhaps a timely opportunity?
We have been told that a small minority of school fee planners have aggressive timeframes in implementing school fees planning. Currently this appears to fall under HMRC radar as it is not straight forward for HMRC to connect the dots with this planning. However, this does not mean this will continue forever – with the burgeoning big data revolution HMRC as poised to invest in IT systems to enable them to fill the gaps much quicker than they are now.
As such, school fees planning should be based on sound principle and careful thought; a matter of good design not a matter of good fortune.
YOU SHOULD NOT ACT (OR OMIT TO ACT) ON THE BASIS OF THIS ARTICLE WITHOUT SPECIFIC PRIOR ADVICE. SHIPLEYS TAX PLANNING PROVIDES A TAX CONSULTANCY SERVICE AND CAN ADVISE YOU OF THE RIGHT COURSE OF ACTION.
If you are interested in School Fees Tax planning, please call us on 0114 272 4984 or email us at firstname.lastname@example.org.
AS THE PANDEMIC becomes more of a way of life rather than something that can be avoided, many are looking to straighten their tax affairs with regards to passing wealth to the next generation and mitigate Inheritance Tax (“IHT”). Current social media trends are questioning whether it is even right to leave a legacy to heirs.
Away from these discussions, in today’s Shipleys Tax brief we look at whether it is possible to reduce or avoid inheritance tax by gifting property to your children, but it can be quite complicated, and it is easy to get it wrong. Professional advice should be taken in advance, but as a quick explainer see today’s blog below
What is IHT?
A brief explainer here. If you plan to pass on assets or money after you die, your heirs could face a tax bill of up to 40% of your estate. Your estate is defined as your property, savings and other assets after any debts and funeral expenses have been deducted. You can reduce or avoid IHT in a number of ways (IHT is often called the “voluntary tax”) There’s a tax-free allowance, and you can also give away a certain amount of your money during your lifetime, tax-free and without it counting towards your estate.
So whats the plan?
No one likes the idea of the taxman taking a chunk of their estate when they die, particularly if it will be necessary to sell a much-loved property to pay the inheritance (IHT) bill.
The introduction of the residence nil rate band (“RNRB” – currently set at £175,000) means that a couple can now leave combined estates worth £1 million free of inheritance tax where this includes a residence valued at £350,000 or more, which is left to direct descendants. However, the RNRB is reduced where a person’s estate is worth more than £2 million and lost where the value of the estate exceeds £2.35 million.
If it looks likely that there may be IHT to pay, the idea of taking steps to reduce this is attractive. Where property is given away more than seven years before the donor’s death, it escapes IHT. Giving property to the children may, at first sight, be an attractive option, but are there are traps to be aware of?
Giving away the main residence
If the main residence is given away, there will be no capital gains tax to pay as long as the main residence exemption applies in full. However, if the property is retained by the children as an investment property, the capital gains tax clock will start to run from the date that they acquire it. By contrast, if the property is gifted at death, there will be a capital gains tax uplift to the value at death, but there may be some inheritance tax to pay (potentially at 40%).
Tax problems arise if the parents give the property to the children but continue to live in it. There are two sets of rules that can affect this adversely – the gifts with reservation rules (GWR) and the pre-owned asset (POA) rules.
The GWR rules apply where a donor gives an asset away but continues to derive benefit from it. An example would be parents who transferred their home to their children but continued to live in it. In this case the rules effectively ignore the transfer for inheritance tax purposes, such that it forms part of the death estate.
The POA rules impose an income tax charge on the previous owner if they give a property away but continue to live in it, based on a notional market rent of the property.
Seeking to take an investment property outside of the death estate can trigger a capital gains tax charge where a property is given to a child, even if no money changes hands. The child is a connected person and the property is deemed to be disposed at market value. This may trigger a capital gains tax bill of 18% or 28% of the gain (to the extent it exceeds the annual exemption), which must be paid within 30 days (but with no proceeds from which to pay the tax).
The best advice?
Giving away property in an attempt to save inheritance tax can be very complicated and it is easy to get it wrong; professional advice should be taken in advance to avoid the many pitfalls that lay in tax legislation.
Shipleys Tax have a wealth of experience providing practical and affordable IHT mitigation strategies.
If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email email@example.com to arrange a free no obligation consultation.
THE PANDEMIC has left many businesses struggling for cashflow who may not have enough profits to pay the usual dividends. So how should you extract cash from your company? In today’s short Shipleys Tax brief we look at some basic strategies to help you manage your cashflow tax efficiently.
If you operate through a limited company, for example as a personal or family company, you will need to extract funds from your company in order to use them to meet your personal bills. There are various ways of doing this. However, a popular and tax efficient strategy is to take a small salary which is at least equal to the lower earnings limit (set at £6,240 or 2021/22) to ensure that the year is a qualifying year for state pension and contributory benefits purposes, and to extract further profits as dividends.
However, this strategy requires the company to have sufficient retained profits from which to pay a dividend. If the company has been adversely affected by the Covid-19 pandemic, it may have used up any reserves that it had. As dividends must be paid from ‘retained’ profits, if there are none, it is not possible to pay a dividend.
So what are there other options for extracting funds to meet living expenses?
Pay additional salary or bonus
Unlike a dividend, a salary or bonus can be paid even if doing so creates a loss – it does not have to be paid from profits. However, this will not be tax efficient once the salary exceeds the optimal level due to the National Insurance hit and the higher income tax rates applicable to salary payments.
Take a director’s loan
If it is expected that the company will return to profitability, taking a director’s loan can be an attractive option. Depending when in the accounting period a loan is taken, a director can benefit from a loan of up to £10,000 for up to 21 months free of tax and National Insurance. If the company has returned to profitability within nine months of the year end, a dividend can be declared to clear the loan in time to prevent a special company tax charge from arising. If the account is overdrawn at the corporation tax due date nine months and one day after the year end, the special tax charge of 32.5% of the outstanding amount must be paid by the company (although this will be repaid after the corporation tax due date for the accounting period in which the loan balance is cleared).
Put personal bills through the director’s loan account
Another option is for the company to pay the bills on the director’s behalf and to charge them to the director’s loan account. Again, if the company has sufficient profits to clear the outstanding balance within nine months of the year end, a dividend can be declared to prevent a special tax charge from arising. A benefit in kind tax charge (and a Class 1A National Insurance liability on the company) will also arise if the outstanding balance is more than £10,000 at any point in the tax year.
Provide benefits in kind
Use can be made of various tax exemptions, such as those for trivial benefits and mobile phones, to provide certain benefits in kind in a tax-free fashion.
If the company is run from the director’s home, the company can pay rent to the director for the office space. This should be at a commercial rate, and the director will pay tax on the rental income. However, there is no National Insurance to worry about and the rent can be deducted in computing the company’s profits, even if this creates a loss.
As a bonus, if the extraction policy creates a loss, it may be possible to carry the loss back and set against previous profits of the company to generate a much-needed tax repayment.
If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email firstname.lastname@example.org.
Please note that Shipleys Tax do not give free advice by email or telephone.