Many of us are worried about how coronavirus is impacting our finances. So far we have identified the following advice points that associate dentists may be able to benefit from.
This article is checked and updated regularly. Where you see an updated date below, this is the last time there was any change to the government’s help/advice in this area.
1 – Time to pay your next tax bills
UPDATED 25 September 2020
Income tax payments due in July 2020 under self-assessment are deferred until January 2021. Deferral is automatic with no applications required. There are no penalties or late interest charges for the deferral period.
If you have set up any direct debits or bank payments in advance and want to take advantage of these deferments they will need to be canceled. HMRC does not have the ability to cancel any direct debits or repay any payments made to them.
VAT payments have a similar deferment scheme until 30 June 2020.
For dentists trading, as a limited company is no announcement about deferring Corporation Tax or other tax payments like PAYE. You’ll need to contact HMRC to ask to arrange delayed payments under the time to pay scheme.
Call HMRC on 0800 0159 559 on their helpline for businesses and self-employed people who are concerned about paying their tax due to COVID-19. You can either defer upcoming tax payments by a couple of months or make an arrangement to pay over a period of time. HMRC will ask you why you want to defer the tax payment and how long you want to pay. I suggest you ask to pay monthly over 36 months.
Call them a week before your tax is due. You will need your tax references to hand for making the first payment and be prepared to set up a direct debit for the rest. The phone line is open daily from 8-6 Monday to Friday. I suggested you call between 4 and 6 to avoid queuing.
2 – Coronavirus Statutory Sick Pay Rebate Scheme (CSSPRS) for dentists who are company directors
UPDATED 26 May 2020
From 13 March if your sick or self-isolating and from 16 April if your shielding and your a director in a limited company with an average salary of at least £6,136 a year can recover two weeks statutory sick pay (SSP) of up to £190. SSP claims for any other directors, company secretaries, and employees earning at least £6,136 per year can also be made.
You should inform the person responsible for the payroll calculations of any sickness and self-isolation. HMRC have a claims system now open to use.
3 – Sick pay for sole trader and partnership dentists
You might be able to claim Employment and Support Allowance (ESA) it’s worth £74.35 a week. A claim does require a lot of paperwork and may not be worth it. You will need 2 full years of national insurance contributions to qualify. The payment is not means tested.
4 – NHS long term sick leave and pay for self-employed dentists
NHS practices will pay 22 weeks of long term sickness payments. You’ll have to incur 4 weeks of no work before the payments start. The payment is calculated using your estimated NHS monthly earnings and seniority payment. Your month 34 payment schedule has your monthly earnings. There is no payment to cover any lost private income.
You must have opted into the superannuation scheme and been a have performer for two years or one year if you have just completed DF1. You will not qualify for any payments if your trading through a limited company.
The maximum payments for sickness leave are £1,660pw up to a total of £36,520 for a dental performer and £3,630pw up to a total of £79,860 for an orthodontic performer.
The payments are liable to income tax and national insurance and last for 5 months and form part of your qualifying pensionable earnings.
5 – Private insurances for sickness
UPDATED 25 March 2020
If you become sick due to coronavirus you should consider making a claim on any private insurance policies you have. If your practice has closed an insurance claim should still be made, This is despite you not being able to get into work.
All insurance policies will have different terms and conditions. We advise you to contact your insurance agent or insurer directly to see if a claim can be made. Payments made form these policies will be free from income tax and national insurance.
The common types of policies include:-
- Critical Illness is often sold with a mortgage and will pay you a lump sum for a specific illness
- *Income Protection will pay you an agreed income
- *Payment Protection Insurance (PPI) will cover mortgage, credit card, and personal loan payments
- *Mortgage Payment Protection covers your mortgage payments only
* These policies usually have a waiting period before the first payment is made. The payments are for an agreed period only.
6 – Mortage payment holiday now extended to 31 October 2020
UPDATED 4 June 2020
Saving cash is going to be important with reduced or no income. We advise you to consider making a claim for a mortgage payment holiday. There is no specific scheme for this. You’ll need to contact your mortgage provider to request it. They will want to know the details of your finances, but it is expected that you won’t need to provide many documents to be granted the holiday.
Payment holidays also apply to buy to let mortgages if the tenants can’t afford to pay you.
If you have already had a 3 month holiday you can ask for a further 3 months.
7 – Rent payment holiday
UPDATED 4 June 2020
You can apply for a three-month payment holiday from your landlord. Your landlord is required to help you remain in your home. There is a ban on repossessions until 31 October 2020.
8 – Access to your savings
Many banks are offering penalty-free access to fixed-term savings accounts. If you need quick access to your savings, ask your provider if they will be charging any penalties.
9 – Using your personal bank account overdraft
Watch out for your overdraft rate. New regulations from 6 April 2020 mean that while there are no separate fees for overdrafts, interest rates are rising sharply with most providers charging around 40%.
10 – Make a claim for child benefit
UPDATED 4 June 2020
If you haven’t claimed or stopped claiming child benefit because you or your spouse earn over £60,000, and you think your income will reduce below this, then you might want to make a new claim.
The payments are £21.05 weekly for the first child and £13.95 for all further children. You normally qualify for Child Benefit if you’re responsible for a child under 16 (or under 20 if they stay in approved education or training). Fill in Child Benefit claim form CH2 and send it to the Child Benefit Office. Payments are received weekly or 4 weekly and backdated for 3 months.
If you or your partner’s total taxable income at the end of the tax year is between £50,000 and £60,000 a % of the benefit will need to be repaid. If it’s over £60,000 all of the benefits will be repaid. Payments are made to HMRC, with your January tax payment.
11- Apply for a coronavirus bounce back loan
UPDATED 25 SEPTEMBER 2020
This is the best funding we have seen so far for small and micro-businesses needing cash flow assistance. Remember this loan is a debt, not a grant. It may not be suitable for you if you can’t afford the repayments.
The key features of the loans are:-
- Borrow between £2k and £50k (but no more than 25% of business turnover)
- 100% government-backed so you don’t have to use your home as security
- No fees or interest for the first 12 months
- Low rate of 2.5% interest for the rest of the loan
- if you get turned down by a lender you can apply to other leaders with the scheme
- Applications are due to close on 30 November 2020
The key terms and conditions of the loans are:-
- Business must have been solvent on 31 December and have been affected by the coronavirus to qualify
- The length of the loans is for 6 years but early repayment is possible without early repayment fees
- Borrowers remain 100% liable for the debt but lenders are not permitted to take personal guarantees or take recovery action against any personal assets
In September 2020 it was announced new “pay as you grow” terms to include:-
- Repayment terms extended from 6 to 10 years effectively halving repayments
- Ability to have a 6-month interest-only repayment option
- If struggling to make repayments it is possible to have a 6 month payment holiday
Government guidance is at https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan
12 – Check your associate agreements
See how you can limit any drop in your income. Some associate agreements may well place the risk on associates for failure to reach UDA targets. However, we feel it would be unfair, in most cases, for practice owners simply to claw back all the money from associates where the failure to perform UDAs is as a result of COVID-19.
13 – Free key worker childcare for dentists and their staff
By performing emergency treatments you will designated as a keyworker by the Government. This means you will be able to continue to send your children to school. The BDA is currently seeking clarity on this if you’re in private practice.
14 – Extend/shorten the year-end of your Limited company to save on your tax bills
If you are unable to work due to practice closures consider a change to your accounting year. You can prepare accounts for a period of up between 1 to 18 months, rather than the usual 12.
It is good to make an extension to your yearend when profits are falling. Having a longer accounting period will lower the average monthly profits meaning you will pay less tax.
Shortening a trading period to recognise losses will allow the losses to be offset against the profits of the earlier accounting year for a refund of the tax paid.
15 – Self Employed dentists cash in overlap relief
If the yearend date of your accounts is anything else other than 31 March or 5 April you will have an entitlement to overlap relief. Provided your current profits or losses are at a lower rate than when the overlap profits arose, it would be a good time to cash in the relief for a tax refund. Rather than waiting until you file your next tax return, you may be able to refile your last tax return to claim the relief and refund.
16 – Associate payments from NHS Dental practices and private capitation schemes
Updated 5 May 2020
NHS England has said they will pay 1/12th monthly of the 2020-2021 NHS contract. There will be an agreed and fair reduction for any variable costs associated with service delivery (e.g. in recognition of reduced consumable costs). Practices will pass payments on to associates. The contract value and reconciliation in 2020-21 will take into account the difficulties of delivery for the period of the COVID-19 pandemic. The NHS may need to redeploy associates within the NHS during the crisis to provide emergency dental and other care. We understand the redeployment is voluntary with exceptions for anyone at risk or with, or caring for anyone with an underlying health condition. If practices are struggling to meet their commitment to demonstrate support for NHS care, one option for practices is, to withhold some money due to associates under the terms of the NHS help until it is clear whether there will be any such clawback.
Most private patients will likely continue to pay into their private capitation schemes. Some may stop. Practices will continue to get the capitation money. In many cases, practices will continue to pay associates their share of the capitation money they receive. Associates receiving capitation money in respect of private capitation schemes should discuss with practices what happens if the associateship ends before the associate can do the relevant routine dental work.
Disputes over payments
If your practice isn’t paying over what you believe they should, the BDA has launched a pay dispute service for its members working within the NHS. The aim is to help associates and practice owners reach a fair agreement on NHS pay that is based on the NHS conditions for continued contract payments.
17 – Coronavirus job retention scheme (wage grants for dentists with a company)
Updated 31 July 2020
A taxable government grant will cover 80% of the monthly salary of employees and directors until August this then falls to 70% in September and 60% in October when the scheme closes. The scheme also covers 80% of employers’ national insurance payments and statutory pension contributions up to £125 until July when this part of the scheme finishes.
All workers in employment on a payroll up to 19 March 2020 can be included. Furloughing can be backdated to 1 March 2020 and ends on 31 October 2020. Until 30 June 2020 furloughing must be for a minimum of 3 weeks. However, from 1 July if you had not been furloughed by 10 June you will not be allowed to continue in the scheme. From 1 July 2020 flexibility is introduced for workers to start to work part-time and claim flexi furlough status.
Flexi furloughed workers need to establish the total number of hours they usually worked pre COVID and then record the hours they are actually working. This is so claimes can be apportioned between working hours and furloughed hours for the month.
Dentists who are directors in a limited company
Most dentists with a limited company will operate payroll for their directors and maybe a company secretary’s salary payments. For tax efficiency, these salaries are monthly amounts of £1,041 or £732 and do not have any employer’s national insurance or statutory pension payments. The company profits are then paid out as dividends to the shareholders who are usually the same people. Salaries for directors and company secretaries are to be included within the grant. Shareholders’ dividends are not covered and not covered under this scheme or the statutory self-employment pay scheme (see #20 below) either.
For a dentist director to claim furlough, you can’t do any work clinical work or provide any services to your practice and patients. However, you can continue to carry out directors’ duties such as preparing accounts and signing documents and foster the company’s business relationships with suppliers, customers, and others
To claim under the scheme you will need to:-
- Prepare meeting minutes to identify directors to be furloughed and agree on dates
- Ensure they only work doing their directors duties
- Submit information to HMRC about their earnings through a new online portal
- Continue to pay and report the payroll as usual under PAYE
After you submit a claim payment will be made to your bank account within 6 working days. Claims can be made with 14 days of the upcoming payroll date.
There is the option to reduce salary payments by 20% for any furloughed workers. Our advice is to continue processing the director’s salary payments as usual for maximum tax efficiency.
Dental company’s with a furloughed company secretary
If you have appointed a salaried company secretary (who is typically your spouse) with very limited duties they can remain on full furlough until the scheme ends in October.
£1,000 Furlough Bonus
You’ll be able to claim £1,000 for each furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021.
If you are short of funds the government advice is to consider the #11 – Apply for a coronavirus bounce back loan.
18 – Business rates cash grants for dental practices of £10,000
Updated 5 May 2020
A dental practice that gets small business rates relief will receive a one-off cash grant of £10,000.
A further government fund of £617m is to be set up to help small businesses (under 50 employees) with fixed property costs, that meet the criteria for small business rates relief but haven’t been able to make a claim as they are outside the business rates system. Payments from this fund will be made discretionary from local authorities.
Local authorities who pay these grants now have online claim forms available on their websites.
These grants are for the practice owner(s) and are not for passing on to associates.
19 – BDA members support, benevolent fund and budget planner
Updated 4 April 2020
If you can’t meet essential household expenditures, you can apply for financial support on the BDA website. You can also access a free budget planner to help you assess your finances and make plans for the future.
20 – Help for self-employed/partnership dentists earning less than £50,000 (Self-Employed Income Support Scheme)
Updated 04 June 2020
Due to the £50,000 income ceiling, this grant payment is only likely to benefit part-time self-employed dentists or trainee dentists on a lower income.
This taxable grant allows payments to be made for:-
- A first taxable grant of 80% of average monthly taxable profits over the three years to 5 April 2019 for the first three months to 31 May 2020.
- A second taxable grant of 70% of average monthly taxable profits over the three years to 5 April 2019 for the second three months to 31 August 2020.
- Capped at a total of £7,500 for the first three months, dropping to £6,570 fro the second three months.
- Payable as a lump sum from 25 May 2020 for the first period and in August 2020 for the second period, and administered by HMRC.
- Claims for the first grant must be made on or before 13 July 2020.
- Two separate claim periods: no requirement for a claim for the first period to be eligible to claim for the second and final period.
To qualify you must:-
The same eligibility conditions apply to both rounds of grant funding.
- Have submitted your Income Tax Self Assessment tax return for the tax year 2018-19 on or by 23 April 2020.
- Have traded in the tax year 2019-20.
- Are trading when you apply or would be except for COVID-19.
- Intend to continue to trade in the tax year 2020-21.
- Have lost trading/partnership trading profits due to COVID-19. You should keep records to support this.
- Average self-employed trading profits between £0 – £50,000.
- Have more than half of your total income from self-employment profits.
- You can check online with HMRC to find out if you’re eligible to make a claim, you’ll need your Self Assessment Unique Taxpayer Reference (UTR) number and your National Insurance number.
How to claim?
- You must make the claim yourself. Your tax agent or adviser must not claim on your behalf as this will trigger a fraud alert, and you will have to contact HMRC. This will cause a significant delay in you receiving your payment.
- You can claim online with HMRC using your Government Gateway user ID and password – if you do not have a user ID, you can create one when you make your claim.
This scheme does not cover directors or shareholders trading as a limited company. If you are short of funds the government advice is to consider number 11 above – Apply for a coronavirus bounce back loan.
21 – 3 month extension to companies house filing deadlines for company accounts
Updated 14 July 2020
Company directors now have 12 months rather than the usual 9 to present their accounts to Companies House before a late penalty for filing is issued.
The filing date for confirmation statements has increased to 42 days from 14 days and the striking off of a company from the register has been suspended until 10 September 2020. Check for more guidance from Companies House.
We will update you as we learn more. Please share us with your dental colleagues and give us a follow and on our Instagram, Twitter, and Facebook pages. Keep an eye on our article page. Until then, don’t panic and wash your hands.
22 – Stamp duty saving
Added 31 July 2020
If you purchasing a new home you won’t pay stamp duty on the first £500,000 of a property’s purchase price (until 31st March 2021 – £250,000 available in Scotland and Wales).