Budget 2021: the first steps on a rocky road to recovery?
As expected, this year’s Budget announcement was one dominated by the very real challenge of starting our economic recovery following the Coronavirus pandemic. Pegged as the most important Budget announcement of a generation and given among the worst recession that England has seen for 300 years, expectations were high and yet tinged with worry, especially as elements like the extension of the furlough scheme until September had been announced previously.
However, it was not a Budget filled with the predicted doom and gloom, and instead there were a number of interesting announcements that could very well help dental professionals and the dental industry in the short- and long-term.
Rishi Sunak highlighted three main points to focus on in order to achieve what the 2021 Budget set out. He mentioned that, although it’s very important to support and help people during a public crisis, in normal times the government would not be borrowing for everyday public spending. He also highlighted that the UK is in desperate need of reducing debts, and that now is a great time to invest in capital investments. This came after he revealed that a further £65 billion was to be spent on Coronavirus support measures, taking total support spending to £407 billion – money comparable to what was borrowed during the two World Wars and which would need to be recouped.
A symbiotic relationship with businesses
It was made clear in these new plans that businesses and the Government are going to have to develop a significant two-way relationship if the economy is to recover.
Corporation Tax is to be increased to 25% in the year 2023, however, as this tax is only on company profits, the vast amount of dental practices will be unaffected. This reduces some of the benefits of dentists working within a limited company. Plus, the amount of profit is going to be taken into account, meaning that unless your practice sees profits of over quarter of a million pounds a year, you will not be liable to pay the full 25% rate.
Businesses will also be able to carry back losses for additional tax refunds – this is especially pertinent for any dental practices that may currently be operating at a loss due to closure during the first national lockdown and will give them a chance to recover financially over a longer period of time. This could be an ideal time to invest in the practice whilst taking advantage of these benefits.
There is also to be an extension on the current VAT cut, keeping the rate at 5% until the 30th September. Though most work provided by dental professionals isn’t subject to VAT, for those who provide cosmetic treatments that are VAT applicable this is good news as this reduction can be passed on to patients, creating more opportunities for certain procedures and treatments.
A good time to purchase anew home or practice
With bank interest rates at a historic low, and Rishi Sunak announcing that the existing holiday on Stamp Duty has been extended until June, there has never been a better time to look at acquiring a new property. For first time buyers there was also the announcement of government-backed 95% mortgages, which should help those struggling to pull together a substantial deposit to get on the property ladder. This morning I personally took advantage of the fantastic low rates available and signed a 5 year fixed mortgage at 1.44%!
For you, your staff and the industry
The extension of the furlough scheme is something that may or may not impact your practice depending on your current situation. It’s likely that as the demand for dental services is high right now, you won’t have many staff on furlough. If you do, this provides a good safety blanket to introduce them back slowly, when you are in a more secure financial position to do so.
The minimum wage has also increased, meaning that staff on this pay bracket will receive a pay rise, which should hopefully help morale among your team. The 2021 Budget also set out to help any self-employed workers who may have not been able to apply for relief during the pandemic thus far by widening access to grants, meaning that more professionals may now be able to claim assistance.
Another positive piece of news is that Income Tax and Personal Tax rates remain frozen until 2026, meaning that workers will not be subject to any of the feared tax hikes. Pensions and Inheritance Tax rates are also the same as before, so no nasty surprises there.
New grants promoting British science could also have a positive impact on the dental industry – fuelling innovation and the development of new treatments and products.
A hopeful outlook
Although many fears existed about what the 2021 Budget would hold, the announcement was mostly a positive one, especially for dental professionals who are unlikely to be affected by major aspects such as the big future increase in Corporation Tax.
The road ahead certainly won’t be easy, but this announcement has definitely put into place some measures that give economic recovery a good chance in the near future, especially if all goes to plan.
For more information please call 0845 345 5060 or 0754DENTIST.