Tax planning for dentists and opticians

If you’re a healthcare professional, you could be forgiven for getting lost in the extreme complexities of our taxation system and how it affects your practice.

Each tax year you have to plan your personal taxes accordingly and you may need to take charge of planning your corporate taxes if you own a dental practice or opticians. 

It’s no surprise that many dentists and opticians get lost in the various rules and regulations surrounding VAT and come to our experts, who offer specialist services for both these sectors. 

In fact, our accountants are trusted to support locums and practice owners all around the UK with a range of services that only a handful of other firms offer to these individuals. 

So, how can we help dentists and opticians with their tax planning?

Limited company or umbrella company? 

One of the biggest dilemmas facing dentists and opticians surrounds employment status and whether or not it’s better to work as a locum or as an employee. 

Many locum workers find managing the business side of self-employment challenging.

Working fixed-term contracts for an umbrella company will mean your tax and national insurance contributions (NICs) are deducted through PAYE and ensure you remain inside IR35. 

The alternative is to set up your own limited company, which would enable you to maximise your earnings and claim allowable expenses. 

However, you’d be fully responsible for keeping accurate records of your earnings as well as paying tax and NICs through your self-assessment tax return. 

It’s also worth noting that going down this route can affect your superannuation calculation, and our director Matthew Dobbins can advise you on this in more detail. 

What’s liable for VAT?

The first thing to consider when it comes to VAT is whether or not you or your limited company’s annual income will exceed the VAT threshold, which is £85,000 in 2018/19. 

Many dentists and opticians exceed this threshold and your limited company (if you have one) will be liable to pay VAT at 20% the excess earned from providing services in the tax year. 

If you’re employed by an umbrella company, it will be the company that is liable for VAT – not you. 

What’s exempt from VAT?

As a rule of thumb, supplies of goods that are for the benefit of the patient are exempt from VAT. 

For dentists, this includes items classed by HMRC as ‘prostheses’. These can be dentures, crowns, inlays, bridges and orthodontic appliances among other things. 

Sight tests provided by opticians are deemed to be for the benefit of the patient and therefore exempt from VAT, as are the costs of supplying fitting services, advice and follow-up action.

Get in touch

Handling the tax affairs of dentists and opticians is one of our specialisms and we offer tax compliance, advice on business plans, VAT, online accounting and much more.  

To find out more, get in touch with our director Lisa White who can offer impartial advice or handle all the complexities if you work in these sectors. 

 

Get in touch

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