Welcome to our Spring 2019 Dental News
In this issue we take a look at
Tax Rates 2019/20
Making Tax Digital (MTD)
Accounting And Tax Records
How to calculate provider and performer NPE / NPEE
Tax Rates 2019/20
A copy of our 2019/20 tax rates card is now available to download here.
Many of the figures are fundamental to our business and personal lives. We are sure that you will find it a useful point of reference throughout the coming tax year and below we have listed just a few examples of how it can be used.
Personal tax rates
The personal allowance is increased to £12,500 from 6 April 2019. We have also summarised the income tax rates and bands which apply to all types of income
If you buy a property in the UK the tax you pay is different depending on where you live. Stamp Duty Land Tax applies in England and Northern Ireland, Land and Buildings Transaction Tax is payable in Scotland and Land Transaction Tax in Wales. The amount and availability of First-Time Buyers Relief varies depending on where you live.
If you sell an asset such as land, capital gains may be due. Our tax rates highlight the main rates and reliefs so that you can consider the tax bill that may arise.
Rates for businesses
If you run a business, obtaining the right allowances on equipment that your business buys can affect the tax that your business has to pay each year. The Annual Investment Allowance has increased from 1 January 2019 to £1,000,000 per annum. We have summarised the main allowances that are available.
Rates for employees
There are increases in the percentage charges for company car benefits again this year. Our website explains how these are computed to help ensure that you are paying the correct amount of tax.
Travel is a daily part of business life. If you drive your own car on business, HMRC allow certain tax free mileage allowances to be paid. If you are paid less than these rates, you may be entitled to a tax refund. Our website highlights the rates.
These rates are intended for use as a quick point of reference. Should you require any further information, have a simple question or require detailed advice we are only a phone call away.
No tax changes announced in Spring Statement
Despite the continuing uncertainty surrounding Brexit the Chancellor delivered his Spring Statement on 13 March. The purpose of this statement is to update the House of Commons and the country on the state of the economy; it is not intended to include any major tax announcements, and none were made by the Chancellor.
As already announced, the personal allowance and the higher rate tax threshold will increase on 6 April 2019. The personal allowance rises to £12,500 and the basic rate band to £37,500, which means that for most taxpayers the higher rate tax threshold will be £50,000. These thresholds were due to come into effect from 6 April 2020 but the Chancellor announced that the start date would be brought forward by one year. Note that the limits will then remain the same for 2020/21.
A summary of this year’s Spring Statement is now available.Download Spring Statement
Making Tax Digital (MTD)
Making Tax Digital (MTD) has been recently introduced by HM Revenue & Customs with the intention to make the tax system more effective, efficient and easier for taxpayers.
This is a significant change to the administration of taxes and dental practices, associates and hygienists will be impacted by the new scheme.
Businesses will need to maintain their accounting records in a digital format and submit updates to HM Revenue & Customs using MTD compliant accounting software. This is with the aim of providing ‘real time information’ to HM Revenue & Customs.
The initiative will ultimately affect all business taxes (income tax, corporation tax and VAT). Making Tax Digital (MTD) is going to be phased in gradually and commenced on 1 April 2019 with Making Tax Digital for VAT. Following the recent Spring Statement delivered by the chancellor, he has confirmed that Making Tax Digital will not be extended to income tax and corporation tax until April 2021 at the earliest.
Making Tax Digital for VAT
VAT-registered businesses with a taxable turnover above the VAT threshold, which is currently £85,000, are now required to maintain their accounting records in a digital format and use MTD-compatible software to submit their VAT Returns for all VAT Returns that start on or after 1 April 2019.
For the majority of our dental clients, Making Tax Digital for VAT does not apply as services of registered dentists and dental care professionals to perform health related treatments are exempt from VAT. However, this may be relevant to dental practices who supply cosmetic and aesthetic related procedures and are therefore registered for VAT.
If your business is registered for VAT, your contact at Humphrey and Co will have been in touch to assist you in helping your business conform to these new requirements.
Making Tax Digital for Income Tax and Corporation Tax
In the lead up to April 2021 and for those Dental practices, associates and hygienists who are not required to file quarterly VAT Returns, Humphrey are Co are gearing up to support your business and ensure it will be digitally ready.
We shall provide further details to you as and when we receive further information from the government.
In the meantime, dental associates and hygienists who continue to run their business income and expenses through their personal bank account will benefit from having a separate bank account solely for their business income and expenses.
NHS Pension – Potential Annual Allowance Tax Charge
Generally, an individual can make annual pension contributions of up to £40,000 that will qualify for tax relief. This is known as the annual allowance.
The annual allowance is tapered for those individuals with an “adjusted income” exceeding £150,000. “Adjusted income” is calculated as taxable income plus your pension input.
If your adjusted income for 2018/19 exceeded £210,000, your annual allowance is fully-tapered to £10,000.
For the NHS Pension scheme, the “pension input” is measured as the annual growth in the pension, and not the contributions made.
It is possible that your pension input for 2018/19 exceeded your annual allowance. If this is the case and there is insufficient unused allowance available from previous years then an excess pension tax charge will arise and this will need to be reported on your Tax Return.
If an excess pension tax charge does arise, it is possible to opt for the NHS Pension to pay the tax charge. You must obtain advice from a financial adviser in this regard as Humphrey and Co is not authorised to provide investment advice or assist in such matters. Please note that if a pension tax charge does arise then and you wish to opt for scheme to pay, then an application to NHS Pension must be made by 31 July 2020.
To enable Humphrey & Co to review your NHS pension position for 2018/19, you will need to obtain your NHS Pension Annual Allowance Pension Savings Statements for 2018/19 (for both the 1995/2008 scheme and 2015 scheme). NHS Pension Services will automatically provide dental practitioners with Pension Saving Statements by the 6 October following the end of the year. e.g. 6 October 2019 for 2018/19.
If you do not receive these by this date, you should request Pension Savings Statements from NHS Pension Services by:
- calling 0300 330 1346; or
- emailing firstname.lastname@example.org
You will need to quote either your National Insurance or Pension Membership (SD) Number.
It is important that the Pension Savings Statements are forwarded to Humphrey & Co upon receipt to ensure that we are able to review your tax position accordingly and advise whether any tax charge applies.
Dental Associates Digital Records Request
As I am sure you are aware 5th April 2019 marked the end of the 2018/19 tax year. Due to increased postal costs, technological advances and GDPR we are now requesting our Dental Associates provide us with their records digitally in good time.
As you will see below, a discount is available for providing your records in the correct digital format. We have put together a guide of how these records will need to be prepared using one drive, please click here to download the guide.
As an incentive, if you send us your digital records early there will be a discount on our standard fee as detailed below. The discount will only be available if the records are complete and prepared in accordance with the guidance.
- 5% if received before 30th June 2019
- 5% if sent digitally and complete by following our attached guidance
So a potential 10% discount if both the above criteria are met.
Clients have been contacted directly requesting this information.
How to calculate provider and performer NPE / NPEE
By 30 June 2019, all NHS contract holders are required to declare each Performer’s Net Pensionable Earnings (NPE) earned between 1 April 2018 and 31 March 2019, in line with the Annual Reconciliation Report (ARR).
Thereafter the Performer will have opportunity to agree or reject the figure provided within Compass. We advise all Performers should agree this calculation as it is this figure that will be used to calculate pension contributions and maternity payments.
Please click the link below for the NHS Business Services Authority’s guidance on this matter and contact us should you have any queries or need any assistance.