20 Nov How will the 2024 Autumn Budget Impact Dental Practices?
The 2024 Autumn Budget from Labour’s Rachel Reeves is out, and it brings some major updates to UK tax and wage policies, with many dental practices likely to feel the effects.
Labour’s first budget in over a decade prioritises economic growth and fiscal responsibility, but the implications for small and medium-sized enterprises (SMEs)—including dental practices—are complex. If you run a dental practice, here’s what you need to know about how the Autumn Budget might affect your business.
Key Budget Changes and What They Mean for Dentists
Employer National Insurance (NIC) Hikes
Let’s get the tough news out of the way first: employers’ NICs are going up, with Labour aiming to raise £25 billion by the end of parliament. This means higher payroll costs, which may make it harder to grow your team or even adjust wages. The Office for Budget Responsibility (OBR) predicts that 60% of these costs will be passed down to employees or customers by 2025. If you’re already feeling the pinch on payroll, brace yourself.
A Boost to Employment Allowance
Now, for a bit of relief: the Employment Allowance will double to £10,500, which should help about a million small businesses—including many dental practices. And with the eligibility cap gone, all practices can now qualify, and this increase can offset NIC costs, especially for smaller practices*. Practices with part-time staff, in particular, might benefit here, as they can apply this allowance to cover more of their NIC contributions, potentially freeing up cash flow for other costs. For practices with fewer employees or a mix of full-time and part-time roles, this allowance offers some much-needed breathing room.
Capital Gains Tax (CGT) Increases
Planning to sell your practice soon? Take note: CGT rates are rising from 10% to 18% at the lower rate and from 20% to 24% at the higher rate. So, if you’re thinking about cashing out, this change will cut into your gains. Planning your timing carefully and consulting a tax professional might be a good idea.
Inheritance Tax (IHT) Freeze and Relief Limits
With IHT thresholds frozen until 2030, family-owned practices are likely to be affected. The freeze, combined with limits on Agricultural and Business Property Relief (BPR), could mean a bigger tax hit if your practice value is over £1 million. This change calls for some strategic planning if you’re thinking of passing the practice down to family members.
National Living Wage Increase
The National Living Wage will jump to £12.21 an hour from April for workers aged 21+, with increases for younger employees as well. This wage hike, combined with NIC increases, is something to budget for, especially if you have a larger team.
How Will These Changes In The Autumn Budget Affect Your Dental Practice?
1. Higher Operating Costs
With NICs and wages rising, payroll expenses are about to go up. If you’re running a smaller practice with a tight budget, you may feel this impact more. But with the increased Employment Allowance, smaller private practices at least get some support.
2. Big Decisions on Financial and Succession Planning
The CGT increase means now’s a good time to think about your future financial plans, especially if you’re considering selling in the coming years. For family-run practices, the freeze on IHT thresholds plus BPR limits mean strategic planning is critical if you want to minimise inheritance taxes.
3. Cutting Costs and Boosting Efficiency
As costs rise, finding ways to streamline operations will be essential. Investing in a good dental software solution, like Pearl Dental Software, can cut down on admin time and help you track expenses better. When payroll costs rise, every bit of efficiency helps.
How Pearl Dental Software Can Help You Navigate These Changes
Pearl Dental Software is designed to help practices adapt in times of change. Here’s how its software features can help:
- Increase Efficiency: Automate scheduling, billing, and patient management to reduce admin costs.
- Financial Management: Track your budget and expenses more accurately to stay on top of rising costs.
- Adaptability: With tax and payroll changes, Pearl’s features help keep your practice compliant without the manual work.
Best of all, Pearl Dental Software remains the best value-for-money Dental Practice Management Software (DPMS) on the market. Comparable systems with similar features are nearly double the cost, making Pearl the smart choice for practices seeking both advanced functionality and affordability.
Final Thoughts
The 2024 Autumn Budget is a mixed bag for dental practices. While NIC and wage hikes are inevitably going to raise costs, the Employment Allowance offers a little help for smaller practices. The key to navigating these changes is smart planning and efficiency—use tools like Pearl Dental Software to streamline operations and keep finances on track.
See how Pearl Dental Software helps you stay efficient. Book a free, no obligation demo today.
*”To help small businesses, the employment allowance will double. It will now be £10,500, up from £5,000. This will help about one million small businesses, giving them some relief.
The eligibility criteria in relation to the employers’ national insurance annual threshold of £100,000 has also been removed, allowing all businesses to take advantage of the employment allowance.” Together Accounting
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