Are Dentists Paying The Correct Amount Of Tax?
The deadline for filing your Self Assessment tax return, 31 January 2024, is fast approaching. If you file late, even by 1 day, you will be charged penalties, with interest also charged if your payment is late.
We always advise that returns are prepared as early as possible to allow for planning of tax liabilities, however if your return is currently still outstanding, here are a few areas to consider to ensure you are paying the correct amount of tax.
Tax deductible expenses need to be wholly and exclusively for the trade. This includes the purchase of equipment, courses including any associated travel costs, phone costs if used for business.
Gift Aid payments
One area which is often forgotten about is claiming relief for your Gift Aid payments made. If you have given to charity, large donations to well-known causes, or even small donations to those fundraising around the practice, these can help reduce your tax bill.
The donations are ‘grossed up’ to 120% of their value and are added onto your tax basic rate band. As such they allow for more of your income and profits to be taxed at your lowest rates, especially useful for higher rate taxpayers.
Payments on account
For most associates, your tax returns will include payments on account towards your 2023/24 tax liability. As such, it is always advised to consider how the next tax year will compare to the income in your current return.
This is particularly of concern if your future income levels will be reduced. This can be through a variety of reasons, including change of practice, travelling and maternity leave. In such instances, your payments on account can be reduced, helping your cashflow.
Your tax liability for 2023/24 will be estimated, using a combination of actual income for part of the year plus a reliable estimate for the remainder. It is recommended you seek professional advice for this as if your payments on account are reduced too much interest will be charged.
Alternatively, for more information on how we can support your dental practice, please contact our dedicated EQ Healthcare team via [email protected]