Dental News
Spring 2026
Welcome to our Spring 2026 Dental News
In this issue we look at
Spring Forecast
Making Tax Digital for Income Tax
NHS Pension Scheme – changes to contribution tiers
Early Repayment Scheme introduced for 2025/26 underperformance
Electric company cars
Spring Forecast
During a week dominated by news of the Middle East conflict, on 3 March 2026, Chancellor Rachel Reeves presented the Spring Forecast to Parliament. The Chancellor told MPs she had “restored economic stability” as she presented the Office for Budget Responsibility’s (OBR’s) economic forecasts.
The Chancellor focused on how the government’s policies are delivering economic growth, particularly when looking at Gross Domestic Product (GDP) per person. However, the OBR’s report indicates a more nuanced picture and notes that the fiscal context for the next Budget will remain challenging.
As part of the government’s policy of one major fiscal event a year, the Chancellor announced no new tax or spending policies. However, the OBR’s forecasts do provide some early clues about future tax and spending pressures.
What does the Spring Forecast tell us about tax?
From a tax perspective, the OBR’s report points to a tax environment that will feel increasingly heavy over the rest of the decade. Taxes as a share of GDP are projected to climb to 38.5% by 2030/31, a post-war high.
Much of this increase comes from the freeze on income tax thresholds, which will continue until April 2031. Combined with rising wages, this means more people are being pulled into paying higher tax rates, even if their circumstances have not changed.
The state pension creates an interesting complication: from 2027/28 it is expected to exceed the personal allowance, bringing an estimated 600,000 more people into tax in 2026/27 and around 1 million by 2030/31. The government has said it does not intend for pensioners whose only income is the basic or new state pension to pay income tax during this Parliament. However, the final details on this policy and how it will work in practice have not yet been announced.
The OBR notes that the increase in employer national insurance contributions, which took effect last April, is also playing a significant role in the higher tax take. These increased costs are potentially feeding into business hiring decisions at a time when unemployment is forecast to rise to 5.3% in 2026, before falling to 4.1% by 2030.
Self-assessment payments are also expected to rise sharply in 2026/27, partly due to the non-domiciled tax regime being abolished in 2025/26 and a subsequent temporary repatriation facility being offered. If you have overseas income or assets, it is still important to carefully review your tax planning.
The strong performance of UK equity shares in recent months means that the OBR are expecting receipts from capital taxes to rise. If you hold UK equity shares, this may be a good time to review your holdings and consider whether crystallising gains now, rebalancing your portfolio and/or making use of available allowances would put you in a better tax position. Any such planning needs to carefully navigate what are known as ‘bed and breakfasting’ rules (effectively selling to re-purchase), so please do get in touch if this situation applies to you.
The practical message from the OBR’s report is that tax planning is becoming ever more important, and capital taxes and transactions are likely to remain on the government’s radar. For individuals and businesses, this means keeping a closer eye on allowances, thinking about the timing of income, gains and dividends, and making sure you are using the reliefs available. Reviewing arrangements such as pension contributions, profit extraction techniques, and the way assets are held within a family may also lead to simple, practical steps that could help to keep future tax bills under control.
Please click here for our Spring Forecast Summary
Making Tax Digital for Income Tax
Making Tax Digital for Income Tax officially launches in April 2026.
The change is enormous and means that sole trader businesses and landlords will need to keep detailed digital accounting records and file digital quarterly figures with HMRC, plus the usual end of year Self-Assessment Tax Return.
This new mandatory regime for income tax reporting is likely to impact a significant proportion of our self-employed dentists and dental professional clients.
You can read more about HMRC’s MTD for ITSA initiative here:
Making Tax Digital for Income Tax - HMRC guide
We are now rolling out our solution to our dental clients who have submitted their Tax Return for 2024/25 and are mandated to register for Making Tax Digital from 1 April 2026 onwards. All affected dental clients will now have been informed with our offering.
If you do have any questions, please do feel free to contact your Humphrey & Co representative.
NHS Pension Scheme – changes to contribution tiers
From 1 April 2026 and following the implementation of the “agenda for change” pay award issued to NHS staff, pensionable pay tiers used to determine the rate at which contributions into the NHS Pension are made have been updated.
Please see the new tiers below (contribution rates have not changed):-
| Pensionable pay range from 1 April 2026 |
Contribution rates from 1 April 2026, based on actual annual pensionable pay |
| Up to £13,259 | 5.2% |
| £13,260 to £28,854 | 6.5% |
| £28,855 to £35,155 | 8.3% |
| £35,156 to £52,778 | 9.8% |
| £52,779 to £67,668 | 10.7% |
| £67,669 and above | 12.5% |
Early Repayment Scheme introduced for 2025/26 underperformance
NHS Business Services are introducing a new scheme to dental providers of NHS Contracts.
As part of the 2025/26 annual reconciliation process, dental providers will be informed of any projected under-performance of their annual contracted target and can repay the shortfall via seven monthly instalments (previously three).
Eligible providers will be contracted by NHS with an invitation to join the new scheme.
Electric company cars
Switching to an electric vehicle continues to be tax beneficial in the short term, although it remains to be seen whether the government will continue to offer the attractive tax incentives over the medium and long term future.
The Chancellor recently announced in the Autumn Budget that the favourable 100% first year allowance tax relief for zero-emission vehicles (ZEVs) and chargepoints is to be extended to 5 April 2027.
For the 2026/27 tax year, a fully electric vehicle will fall in the 4% Benefit in Kind tax rate, which does sit favourably when comparing the tax due on either a petrol or diesel vehicle, although an incremental increase will apply of 1% per annum to 5% in the 2027/28 tax year.
These low Benefit in Kinds (BIK) on fully electric cars (or good hybrids with emissions of less than 50g/km) means that anyone operating via a limited company may consider leasing or purchasing a relevant vehicle. Based on current legislation, it is generally tax-efficient to purchase fully electric cars as company cars via a limited company. This is because the company car tax (4% for 2026/27) will be less than the Income Tax payable on the dividend should a company director/shareholder wish to extract funds to fund the car purchase personally.
If you purchase a plug-in hybrid car then it will be dependent on how many miles a vehicle can cover under battery power and the emissions figure as to whether it is more tax-efficient to purchase as company cars through a limited company or individual ownership.
Please see below the things to consider regarding purchasing a car from the company.
Benefit in Kind (BIK)
It is important to know that the provision of a company car gives rise to a benefit in kind, which has tax implications for both you and the company. You will be liable to pay Income Tax on the benefit and the company would also suffer Class 1A National Insurance (NICs).
The benefit in kind (BIK) rate is also dependent on the level of CO2 emissions of the car, but as you are aware from 6 April 2026 the BIK % for cars which are fully electric will be 4%.
The BIK % is applied to the list price to get the BIK figure - this will then be the figure that you will pay Tax on. The BIK will be declared on your personal Tax Return as employment income.
For example, a Tesla car with a list price of £90,000 would generate a BIK figure of £3,600. For a higher-rate tax payer, income tax liability of £1,440 (£3,600 x 40%) will arise on the company car for the 2026/27 tax year.
The company will also be liable to Class 1A National Insurance Contributions at a rate of 15% of the BIK figure. In the above example this would be £540 (£3,600 x 15%). Please note however, that the company will receive Corporation Tax relief on the Class 1A National Insurance Contributions paid.
Capital Allowances
The company will be able to claim tax relief on the purchase, the amount of the relief is dependent on the level of CO2 emissions of the car.
From 6 April 2026, the main rate of relief for Capital Allowances is reducing from 18% to 14% and the following capital allowances can be received on the cost of the car:-
|
CO2 Emissions |
Capital Allowances |
|
0 g/km |
100% first year allowance – (can only be claimed on new and unused cars) |
|
Between 1 g/km and 50 g/km (or second hand EVs) |
14% reducing balance (previously 18%) |
|
Above 50 g/km |
6% reducing balance |
Electric charge-points are also eligible for 100% first year allowances until 5 April 2027.
In order to obtain tax relief in the form of capital allowances, the company will need to either:
- purchase the car outright
- purchase the car using a straight-forward loan with interest in the company’s name or
- by hire purchase in the company’s name.
It is also worth noting that if Capital Allowances are claimed, when you come to sell the car in the future, if the car is worth more than the ‘tax value’ of the car then the company may have to repay back some of the tax relief. This is known as a ‘balancing charge’.
Tax relief on financing and associated car expenses
The company will also receive tax relief on car running expenses and if the vehicle is purchased using a loan, the company will receive tax relief on the interest element of the monthly repayment.
The company would not receive capital allowances however if it were to lease the car. Instead, the company would receive Corporation Tax relief on the lease/rental payments (relief subject to 15% disallowance if >50g/km).
Vehicle Excise duty
Please note that from April 2028, Electric Vehicle Excise Duty is planned to be introduced for electric and plug in hybrids which will be a mileage charge calculated on a per mile basis coinciding with the existing Vehicle Excise Duty.
If you would like assistance in calculating tax savings and any tax and National Insurance implications on any specific cars, you should speak with your usual contact at Humphrey & Co for more details.
The information provided within our E-Newsletters are general in nature to raise awareness of certain issues that may affect our clients. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from a professional advisor before you take any action or refrain from action.
Whilst we endeavour to use reasonable efforts to furnish accurate, complete, reliable, error free and up-to-date information, we do not warrant that it is such. We disclaim all warranties.
The information can only provide an overview of the regulations and matters for consideration in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice.