​What the 2017 Spring Budget means for dentists

Pile of coins 

The Chancellor delivered the 2017 Budget on 8 March. Here are the areas from the Budget that are likely to be relevant to dental practices.

Business rate relief

The business rates revaluation takes effect in England from April 2017 and there's been a lot of concern about the impact it might have on small businesses like dental practices. In the Budget, the Chancellor announced that any business coming out of small business rate relief will benefit from a transitional relief cap meaning their rates will not increase by more than £50 a month over the next few years.

On top of that, a £300m fund will be made available to local authorities to allow them to provide discretional relief to businesses most affected by the revaluation; affected dentists should check with their local authority to see what help may be available.

Taxation

The personal allowance (the amount you can earn before having to pay tax and NI) will go up to £11,500 in April 2017. It is expected to rise to £12,500 by 2020-21.

From April 2017 the amount you earn before having to pay higher rate tax will increase from £43,000 to £45,000 and is expected to rise to £50,000 by 2020/21. The exception to this in Scotland where higher rate tax threshold remains at £43,000.

Tax-free dividend allowance for directors and shareholders of small private companies is being reduced from £5,000 to £2,000 from 2018.

The government expects to raise £820m by the end of this Parliament by tackling tax avoidance. There will be financial penalties for those using ways to get around established rules to prevent tax avoidance, e.g. setting up schemes which are not covered by current tax rules for the purpose to avoid taxes.

Making Tax Digital

Unincorporated businesses with turnover below the VAT threshold have been given an extra year – until April 2019 – to prepare for the introduction of the Making Tax Digital scheme. Businesses above the VAT threshold will be subject to the scheme – which includes quarterly monitoring and digital record keeping – from next year.

Minimum Wage

The Minimum Wage will rise from £7.20 to £7.50 in April.

Lifetime ISA

The Lifetime ISA, available from 6 April 2017, will allow those under the age of 40 to save up to £4,000 each year and receive a bonus of up to £1,000 a year on these contributions. These funds can be withdrawn tax-free to put towards a first home or saved until a person turns 60.

Childcare

Tax-Free Childcare will provide up to £2,000 a year in childcare support for each child under 12.

Parents of 3 and 4-year-olds in England will also benefit from a doubling of free childcare allowance from 15 to 30 hours a week.

Sugar levy

The Chancellor confirmed a levy of 18 and 24p per litre for sugary drinks with more than 5 grams per 100ml and 8g per 100ml respectively. He predicts lower revenue than originally forecast from this tax as producers are making good progress reformulating their products, but the government committed to spending the full £1b they originally forecast to get from this levy on school sport and healthy eating initiatives regardless of the final takings.

National Insurance contributions from the self-employed - proposed changes abolished

Currently, the self-employed may have to pay both Class 4 and Class 2 National Insurance contributions:

  • Class 4 contributions at 9% are paid on profits between £8,060 and £43,000
  • Class 2 contributions are paid on profits of £5,965 or more

From 2018, the Government had proposed that Class 2 contributions would be abolished and Class 4 contributions will rise to 10% in April 2018 and to 11% in April 2019. Any self-employed person with profits over £16,250 would have had to pay more as a result of these changes.

However the Prime Minister has now (15 March) guaranteed the increase will not take place in this Parliament.