Michael Lansdell says the time could be right to invest… (yes, really!)
You may be reluctant to think about making investments due to a rather uncertain economic picture, or you may be keen to look at options for your practice – but are unsure where to start.
The government wants to encourage business investment, in order to support growth. This was reflected in the November Budget, when it was confirmed that Corporation Tax would fall in 2020, to 17%. Incorporating your practice is something that would probably have crossed your mind as a practice owner ¬¬– there is no shortage of articles regarding why incorporation can be a great move for any size of organisation.
Operating within a different tax structure, it has been possible for dentists to trade as limited companies since 2006. You may have heard nightmare stories from other practices on their journey to incorporation (mostly regarding the rules and the restrictions that apply and dealings with the General Dental Council) while, conversely, you may have been inspired by success stories about those who have incorporated and made their practice into a distinct entity in its own right.
Being ‘limited liability’ can give a measure of protection and may even make it easier to secure business loans. It is a huge decision and may not be the right one for you, so, it goes without saying that you must get the very best advice regarding incorporation.
You’ll need to speak with people who have insight into the dental industry, people who can take your individual circumstances – where you are now and where you want to go – into account. However, this new, lower rate of Corporation Tax will make incorporation a more attractive option for small businesses; businesses of all sizes will benefit from a reduced tax burden, too.
Annual investment allowance (AIA) is going to increase, from £200,000 to £1,000,000, for qualifying investments in plant and machinery. This new allowance will apply to investments that you make within a two-year period, from January 1, 2019 to December 31, 2020. If you claim AIA, you can deduct the full value of an investment from profits before tax.
For a dental practice, examples could include a car, certain fixtures and alterations to a building to install plant/machinery (repairs do not qualify). As always, make sure you check the fine print first.
A structures and buildings allowance was also introduced. This has been set at 2% on conversion and construction costs over 50-years (restrictions apply, again get the advice of an expert before making any claims).
It may be an uncertain time for many businesses in the UK including dental practices, but there is no reason why you can’t plan for your future and implement more tax-efficient structures to help weather any storms ahead.
Working with an accountant who knows the dental industry and offers guidance tailored to your practice while allowing for any other forces acting on the UK dental market will prove one of your most valuable resources over the year ahead. The team at Lansdell & Rose can help practices thinking about investing and/or incorporating while providing business support and planning.
With specific measures around investment announced, the government has underlined its commitment to business growth. Maybe the best advice is to get support, then find the positives.
There may be tough times ahead but if you stay optimistic and look for opportunities, the future could be brighter than you think. Why not start a discussion now? Call Lansdell & Rose on 020 7376 9333, or visit www.lansdellrose.co.uk