The Autumn Statement released on the 3rd December in regards to Tax Treatment on goodwill and incorporation was a huge game changer. Arguably, most of the tax benefits of incorporation for dental practice owners have been removed overnight.
Entrepreneurs Relief can no longer be claimed where the transaction is with a connected party i.e. the change of Trading Structure from a Sole Trader to that of a NewCo. If you are a higher rate tax payer with a CGT charge of 28%, this could mean a difference in tax of 18%.
Similarly, the new Limited Company can no longer claim amortise the goodwill acquired from the connected party. This saved some practices 20% tax on the amortisation every year. After the removal of SSP Reclaim entirely in the last budget and with Dental Practices being exempt from the £2,000 NI incentive, is this more bad news for Dental Practice Owners?
What does this mean for Principal Orthodontists who seemingly can now only sell by Incorporating their Goodwill?
Dental Elite are not chartered accountants and cannot provide tax advice, this blog entry should not be constituted as such. Everyone’s tax position is different and professional advice should always be sought. If you would like details of a specialist dental accountant please contact us and we will point you in the right direction.