Dentists warned over UK Budget plans
The forthcoming Budget has the potential to reshape the financial landscape for those looking to sell, acquire or pass on their practices
Dental practice owners, and those considering an acquisition, have been warned that the forthcoming UK Government Budget could contain measures which would significantly impact the financial landscape.
Anna Coff, technical manager at EQ Accountants said: “Among the most pressing concerns is the possibility of significant changes to Capital Gains Tax (CGT), a shift that could dramatically alter the financial landscape for those looking to exit or expand within the sector. For dental practice owners, particularly those nearing retirement or planning to transfer ownership, the timing of any sale has never been more crucial.”
Currently, business owners benefit from favourable CGT treatment, especially through Business Asset Disposal Relief (BADR), which allows gains up to £1 million to be taxed at a reduced rate of 10 per cent. However, speculation is rife that this relief could be curtailed or even eliminated in the upcoming Budget, with CGT rates potentially aligning with higher income tax brackets.
“This uncertainty places immense pressure on those who are in the process of selling their practices,” said Anna.
Writing in this edition of Scottish Dental magazine, she said: “Finalising a sale before the Budget announcement could mean the difference between a significant tax saving and a much larger bill. While the complexities of practice sales – especially those involving third parties – can make it difficult to close deals on such short notice, early conversations and active engagement with potential buyers could help lock in the current tax advantages.”
Beyond CGT, inheritance tax (IHT) changes may also be on the table. The dental community has long benefited from Business Property Relief (BPR), which reduces the taxable value of a practice when it is passed down through inheritance. Any reduction or removal of this relief would complicate estate planning for practice owners who had hoped to pass on their business to the next generation without a significant tax burden. Early gifting strategies, combined with non-tax considerations, should be a priority as the Budget looms closer.
Pensions, too, could be caught in the crosshairs of the new tax strategy, said Anna. “Speculation about changes to the tax-free lump sum and the potential restriction of higher-rate tax relief on pension contributions is of particular concern for higher-earning dental professionals. Maximising pension contributions ahead of the budget may help ensure that practice owners and buyers alike can take full advantage of the current relief levels, which could be scaled back.”
She added: “All of this points to one overarching message: dental professionals cannot afford to wait. The upcoming budget has the potential to reshape the financial landscape for those looking to sell, acquire, or pass on their practices. Taking proactive steps now, with the guidance of a skilled accountant and financial adviser, will be critical in navigating these challenges.”
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