Dentist incorporation 10 years on

Dentist incorporation 10 years on

In 2016 dental practices will celebrate 10 years of being able to incorporate. In this blog we look at the lessons we've learned and what the future holds.

You can save tax

Incorporating can save you tax, but exactly how much will depend on your circumstances.

Questions we always ask:

·         Are you a partnership or sole trader?

·         How are profits split?

·         Do you have any other income?

·         Are you taking a salary?

·         How much are your profits?

The bigger picture

Any monetary saving has to be balanced against the additional compliance and admin costs associated with a limited company.

NHS contracts between a dentist and a primary care trust (PCT) will need to be reissued if a dentist decides to incorporate. This process is time-consuming and there is a danger that the PCT may wish to renegotiate the terms.

Be clear about how any changes could affect your business before signing on the dotted line.

Transferring assets isn't always easy

Unfortunately transferring assets from your old business structure to an incorporated company isn't always straightforward.

For tax purposes you may wish to leave some items out of the transfer. For example, some clients have not transferred their company cars to avoid benefits in kind taxation.

Transfers of assets are likely to arise in capital gains tax (though tax planning can help minimise your liability). In addition, stamp duty may be due on transfers of property. 

Don't ignore personal financial planning

Where are in your career? Or, to put it more bluntly, when do you want to leave? It's vital to consider how your company structure will affect your exit planning.

What's next?

Changes to dividend taxation from April 2016 mean that incorporation (for all businesses) is not as advantageous as it once was.

These changes mean that if you want to withdraw every bit of profit you generate, then a limited company is possibly not the right answer for you.


Talk to us to see if incorporation is right for your dental practice.

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