Why dentists need an accountant who knows dentistry
Dental income does not look like an ordinary salary. An associate is usually self employed, paid a share of fees by the practice, with lab bills and materials taken off before the money arrives. A practice owner has NHS contract income, private fees, plan income and a payroll to run. Mix in the NHS pension and the numbers can get confusing very quickly.
Our ACCA qualified accountants work with dentists across SW6 and the streets around Fulham Road, Parsons Green and Chelsea. Some practices here are fully private. Others hold an NHS contract and see a mix of patients. We look at how you are actually paid, not at a generic template, and build your accounts and tax returns around that.
Associate dentists
Most associates trade as sole traders under an associate agreement. That means you file a self assessment return each year, pay tax and Class 4 National Insurance on your profit, and usually make payments on account on 31/1 and 31/7. Your profit is your share of fees minus the costs you can claim.
Those costs add up. Indemnity cover, GDC registration, BDA membership, CPD courses, loupes, scrubs and travel between practices can all be relevant. We check your associate statements against what you were actually paid, because errors in lab fee deductions or UDA payments are more common than people think. If you work at two or three practices across West London, we bring all of it into one clear set of figures.
- Self assessment returns and payments on account
- Checking monthly associate statements
- Claiming the right professional expenses
- Planning for tax bills so the 31/1 payment is not a surprise
What is included
- Self assessment returns for associates
- Year end accounts for sole trader and partnership practices
- Limited company accounts and corporation tax
- NHS pension annual allowance calculations
- Checking year end pensionable earnings declarations
- Payroll for nurses, hygienists and reception staff
- Incorporation reviews with side by side figures
- Due diligence when buying a practice
- VAT reviews for cosmetic and retail income
NHS and private income in the same practice
If you hold an NHS contract, you are paid against Units of Dental Activity, or UDAs, the measure the NHS uses for courses of treatment. Underperformance can lead to clawback, where money is taken back at year end. Private work, membership plans and finance arrangements are recorded differently. Your accounts need to show each stream clearly so you can see which parts of the practice are making money.
Dental treatment is generally exempt from VAT. Cosmetic work done purely for appearance, such as some whitening, can be treated differently, and selling products to patients may count towards the VAT registration threshold of £90,000. We review your mix of services and tell you plainly whether VAT is something you need to watch.
The NHS Pension Scheme and dentists
Associates and practice owners doing NHS work can usually build up benefits in the NHS Pension Scheme. For dentists the pension is based on career average earnings, which are worked out from your pensionable NHS income each year. Getting the year end declaration of your pensionable earnings right matters, because mistakes affect your pension for life.
Higher earning dentists can also run into the annual allowance, the limit on how much pension growth you can build up each year before extra tax is due. NHS pension growth is measured in a particular way, so a good year can trigger a charge even if you paid in less than you think. We work out your position, help you decide whether to use Scheme Pays, where the scheme pays the charge and reduces your pension, and report it correctly on your return.
Should a dental practice become a limited company?
Incorporating a practice can make sense for some owners, but it is not right for everyone. A company pays corporation tax at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between. You then take money out as salary and dividends. The savings depend on how much profit you leave in the business and how much you need to live on.
There are dental specific points to think about too. NHS contracts have their own rules on who can hold them, and NHS income paid to a company may not count as pensionable in the same way. Goodwill, the value of the patient list, can also be part of the move. We model both options side by side so you can make the decision with real figures in front of you.
Buying or selling a dental practice
Buying a practice in Fulham, Putney or Wandsworth is a big step. Before you sign, you need to know whether the profits shown are real, how much depends on one or two principals, and what the NHS contract is truly worth after clawback risk. We review the accounts and the associate costs, help you build a cash flow forecast for your lender, and look at how the purchase should be structured for tax.
Selling raises its own questions. The sale of goodwill and property may lead to capital gains tax, and the way the deal is set up affects how much you keep. We plan this with you well before completion, not after.
Who this suits
- Newly qualified dentists starting as self employed associates
- Associates working at several practices across West London
- Principals running mixed NHS and private practices
- Fully private practice owners in Fulham and Chelsea
- Dentists planning to buy their first practice
- Hygienists and dental therapists working on a self employed basis
Common questions
Do associate dentists have to file a self assessment tax return?
Yes, in most cases. Associates are usually self employed, so you must register with HMRC and file a return each year by 31/1. Tax is not taken off your pay at source, so you need to set money aside for your bill and your payments on account.
What expenses can a self employed dentist claim?
Common claims include indemnity cover, GDC fees, professional memberships, CPD courses, equipment such as loupes, and some travel between practices. The cost must be for your work as a dentist. We go through your spending and claim what is allowed, without stretching the rules.
Will I get an annual allowance charge on my NHS pension?
It depends on your NHS earnings, your other pension savings and how much your pension grew in the year. Many dentists do not have a charge, but higher earners and those with a large pay rise can. We check your pension savings statement and work it out for you.
Is it worth incorporating my dental practice?
It can be, but only if the numbers work. The answer depends on your profit, how much you draw, your NHS contract and your pension. We prepare a comparison of both options before you decide.
Do dentists need to register for VAT?
Most dental treatment is exempt from VAT, so many practices never register. Purely cosmetic treatments and product sales can be treated differently and may push you over the registration threshold. We look at your services and give you a clear answer.
Can you help me check the accounts of a practice I want to buy?
Yes. We review the seller's accounts, associate costs, NHS contract value and any clawback history. We then help you prepare forecasts for your bank so you know what you are taking on.
I work as an associate in Fulham and also at a practice outside London. Can you handle both?
Yes. We bring all your associate income and expenses into one return, whatever the location. It does not matter where the practices are, as long as we have your statements and records.