Sophie Kwiatkowski shares her advice on how and when to start planning to lower your tax bill for the next tax year
As an associate dentist, it may feel like as soon as the 31 January deadline for one tax return has passed, you are already looking towards the next years’.
It is true that once the January tax bill is paid, you only have time for a short sigh of relief before having to think about the next tax year.
February and March are always busy months in the dentistry world – with everyone working extra UDAs to try and reduce any contract shortfalls.
With all the additional hours of work being done, it is easy to forget that you are coming to the end of another tax year. So, what are the key things to think about?
In April, we are always asked: ‘What can I do to lower my tax bill?’
The answer is that in April you can do very little to reduce your tax bill for the year that has just passed. So why not ask the question now to ensure that any tax reliefs are maximised for the 2018/19 tax year? Pensions are one key area to consider. Although many of you will have opted-in to the NHS pension scheme and be making monthly superannuation contributions, a private pension would be another avenue which can provide additional tax relief. Private pension contributions extend your basic rate band, which means more of your profits will be taxed at 20%.
Time your CPD to be tax-efficient
As dentists, you are required to undertake regular CPD in order to keep your knowledge and skills relevant and up-to-date.
Training courses can be a large expense and so it is worth planning ahead. If you attend a course before 5 April 2019, you will get the tax relief in 2018/19, which will reduce your January 2020 tax bill. If you attend the course after 5 April 2019, it will fall into 2019/20, which will mean the tax benefit doesn’t reach you until January 2021.
As with all expenses as a dentist, the key is to plan and ensure that any tax relief is obtained in the earliest possible tax year. Although the mad rush to complete UDAs will take up a lot of your time, keep the idea of tax planning in your mind to help yourself when January 2020 comes along.