The recent levels of uncertainty caused by the outbreak of COVID-19 were reflected in some measures announced in Rishi Sunak’s first budget as Chancellor of the Exchequer. Budget speeches are often complex at the best of times but with the added domination of the worldwide virus outbreak, it would be no surprise if some of the key points were missed.
Technically separate from the budget, but naturally linked to the current environment, was the Bank of England’s announcement of a cut of 0.5% in interest rates to a base rate of 0.25%. This means the cost of borrowing is at an all time low, and is intended to have an impact on boosting the property sector, meaning it is easier (and cheaper) for buyers to secure financing.
Mr Sunak though did introduce measures to help business, and the healthcare sector in particular. Statutory Sick Pay (SSP) will become payable on the first (rather than fourth) day of absence, meaning most practices will get greater levels of refund if staff are ill and/or required to self isolate. A business interruption loan scheme, covering lending up to £1.2m, will be introduced to support dental practices, with the funding targeted at salaries and other operational expenditure.
There have also been changes to pension allowances. Dentists earning under £200,000 pa will no longer by affected by the tapered annual allowance; this will only apply now to individuals with an ‘adjusted income’ of over £240,000. The minimum level to which the annual allowance can taper down, will reduce from £10,000 to £4,000 from April 2020. This reduction will affect dentists with total income (including pension accrual) over £300,000.
The cut in entrepreneurs’ relief (from £10m to £1m) gives a 10% reduction in capital gains tax (CGT) on the sale of a business. For the majority of dental practices sold, this will still mean a CGT bill of 10%, but for larger practices there will be an increase in CGT liability.
If you want further information on how the budget might impact your practice, please contact us on 0330 088 1156.