The Autumn Budget brings several significant changes that will directly impact dental practices across the UK. Whilst much of the content was discussed in the media beforehand, the confirmed measures now require careful consideration and planning.
The economic backdrop shows modest growth, with the Office for Budget Responsibility upgrading its 2025 forecast, though projections for the following three years average around 1.5% per year through to 2030. The markets responded positively with softer interest rates and a stronger pound, providing some stability for business planning.
For dental practices, this Budget presents both challenges and opportunities. Employment costs are set to rise, capital investment allowances continue to offer relief, and practices operating through limited companies face important changes to dividend taxation. Understanding these changes now will help you plan effectively for the year ahead.
Dental Treatment Costs and the CMA Review
In the run-up to the Budget, there was commentary about private dental costs, with suggestions of ‘excessive’ charges and ‘hidden’ fees. The BDA and others rightly pointed out that these are broad generalisations that don’t reflect the reality of clinical practice or the distinction between NHS and private dentistry.
The Budget announced that the Competition and Markets Authority (CMA) will examine private dentistry. We’re waiting for details on the scope of this review. It’s important that any examination recognises the complexity of dental care provision and doesn’t unfairly target the private sector for wider systemic issues in dental access and affordability.
Capital Investment Allowances
There’s some positive news here for practice investment. A new 40% First Year Allowance has been introduced, which sits alongside the existing 100% investment allowance that covers most equipment purchases. However, the Writing Down Allowance (where you don’t get full first-year relief) has been reduced, meaning tax relief will be spread over a longer period.
It’s worth reviewing your planned capital expenditure to ensure you’re maximising the 100% Full Expensing relief wherever possible, as this accelerates your tax benefit.
For electric vehicles, the message is mixed. The 100% tax allowance continues until 2027, which is good news if you’re planning to invest soon. However, a new 3p per mile charge is being introduced for electric vehicles from April 2028, reducing the cost advantage over petrol and diesel. It’s unclear how this will be monitored in practice—likely through mileage checks at services or MOTs.
Staff Costs: What’s Changing
National Minimum Wage Increases
The national minimum wage for younger workers has increased, and historically this tends to push wages upward across all age groups. This will impact employment costs for practices, similar to what we saw last year. You’ll want to factor this into your budgeting for 2026.
Pension Scheme Changes
This is a significant change that affects salary sacrifice arrangements rather than standard employer contributions. From April 2029, the National Insurance exemption on salary-sacrificed pension contributions will be capped at £2,000 per year. Contributions above this threshold will attract both employer and employee NICs, increasing costs for practices that use salary sacrifice to boost pension benefits.
What this means practically:
- Employer pension contributions outside salary sacrifice remain NIC-free.
- Salary sacrifice becomes less tax-efficient for higher contributions.
- Practices may need to review remuneration packages and consider alternative benefits.
Importantly, tax relief for employees remains unchanged, and NHS Superannuation is unaffected, continuing to offer inflation-proofed benefits.
Limited Companies and Dividend Tax
If your practice operates through a limited company, there’s an important change coming in April. Dividend tax is increasing by 2%, which means you’ll need to review your strategy for extracting income from the company.
This also applies to associates working through limited companies. You’ll have fewer options for remuneration extraction, and for some, this change might tip the balance against operating as a limited company from a tax perspective.
For mixed NHS/private practitioners: If you work through a limited company for private work and as a sole practitioner for NHS, you’ll need to rebalance your structure to minimize overall tax exposure. The calculations can be complex, so it’s worth getting specific advice for your situation.
The government has also announced a consultation on ‘Close Companies’—a category that includes most dental companies. We’re waiting to see the scope and intentions, but it will likely involve closer scrutiny of shareholders and how they relate to company income.
Holding Profits in Your Company
The dividend tax increase may encourage more practice owners to retain profits within the company rather than extracting them immediately. This can work well for building long-term wealth in a corporate structure. Some practices already use Trade/Investment company structures or involve family members in longer-term succession planning.
From 2027, an additional 2% tax will apply to rental income for individuals, so holding property investments in a corporate structure may become more attractive for medium and long-term planning.
High-Value Property Taxation
Changes to property taxation have been introduced that may affect some practice owners. If you own and rent out high-value residential property, it’s worth reviewing how these changes might impact you. The specifics will depend on your individual circumstances, including property values and how the properties are held (personally or through a company).
If you own high-value properties, we recommend discussing your specific situation to understand any tax implications and planning opportunities.
Income Tax Threshold Freeze
The freeze on income tax thresholds has been extended until 2030/31. This is longer than many expected and represents a significant tax-raising measure.
Through ‘fiscal drag’, more of your income will be taxed at higher rates each year simply due to inflation. Your gross pay might rise with inflation, but more of it will be taxed, meaning your take-home pay won’t increase proportionally. The Institute for Fiscal Studies estimates disposable income will increase by only 0.5% on average over the next five years.
Specific Considerations for Associates and Newly Qualified Dentists
Student Loan Repayments
If you have a Plan 2 Student Loan (most qualifying dentists do), the repayment threshold is also frozen. This means you’ll start repaying more of your loan earlier, from Foundation year onwards. In your early years as an associate, you’ll see higher January tax payments.
Build this into your financial planning and budgeting from the start to avoid surprises.
Working Abroad
If you’re considering spending time working abroad, be aware that from April 2026, you’ll no longer be able to make up missed National Insurance years through the voluntary scheme. This will affect your state pension in retirement, so it’s worth factoring into your decision-making.
What Should You Do Next?
The Budget brings clarity, even if not all the changes are welcome. Here are some practical steps to consider:
- Review your capital expenditure plans to maximise 100% allowances
- Assess your staff remuneration packages in light of pension changes
- If you operate through a limited company, review your profit extraction strategy before April
- Budget for increased employment costs from minimum wage rises
- If you’re an associate with student loans, factor increased repayments into your monthly budgeting
- Consider medium-term investment structures, particularly if you’re retaining profits in a company
The key is to plan proactively rather than react to changes as they hit. We’re here to help you navigate these changes and ensure your practice remains financially healthy.
If you’d like to discuss how any of these changes specifically affect your situation, please get in touch. Every practice is different, and personalised advice will help you make the most of the available opportunities while managing the new costs effectively.
