You will be worried, how coronavirus is impacting your finances. So far we have identified the following 19 advise points, associate dentists may be able to benefit from.
1 – Time to pay your next tax bills
Income tax payments due in July 2020 under self-assessment are deferred until January 2021. This is automatic with no applications required. No penalties or late interest will be charged for the deferral period.
VAT payments have a similar deferment scheme for the next 3 months.
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.
There is no announcement about deferring Corporation Tax or other tax payments like PAYE. For dentists trading, as a Limited company, you’ll need to delay your tax bills with the HMRC 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 8-8 Monday to Friday and 8-4 on Saturday. I suggested you call on a Saturday or early before 9 or after 5 to avoid queuing.
2 – Sick pay for dentists with a company
Sick or self-isolated Dentist’s who are directors in a limited company with average earnings as a paid director of £118pw, £512pm or £6,136pa, can recover two weeks statutory sick pay (SSP) of up to £189. SSP claims for any other directors, company secretaries and employees meeting the average earnings criteria on the same payroll can also be made.
You should inform the person responsible for the payroll of any sickness and self-isolation. Your claim for SSP is offset against your next payment of PAYE. If you don’t have any PAYE payments to make a bank repayment can be requested.
3 – Sick pay for sole trader and partnership dentists
You might be able to claim Employment and Support Allowance (ESA) it’s worth £94.25 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.
4 – NHS long term sick leave and pay for self-employed dentists
Long term sickness payments of up to 22 weeks are paid from your NHS practice. You’ll have to incur 4 weeks of no work before the payments start. The amount you can claim is calculated using your estimated NHS monthly earnings and seniority payment. This is found on your month 34 payment schedule. 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 free from income tax and national insurance and last for 6 months and form part of your qualifying pensionable earnings.
5 – Private illness insurances
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 and you become sick 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 paid as a lump sum for a specific illness and is often sold with a mortgage
- *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 and the payments are for an agreed period only.
6 – Mortage payment holiday
Saving cash is going to be important with reduced or no income. We advise you to claim up to 3 months of 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.
7 – Rent payment holiday
You can apply for a three-month payment holiday from your landlord. Your landlord is to help you remain in your home. You can not be evicted for the next 3 months.
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
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 £20.70 weekly for the first child and £13.70 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. Your payments can be received weekly or 4 weekly. The payments can be backdated 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 benefit will be repaid. Any repayment is made to HMRC, with your January tax payment.
11- Coronavirus business interruption loan scheme
Loans will be available from all major banks and lenders that partner with the British Business Bank, which will be 80% guaranteed by the government.
- Loans can provide up to £5 million
- You will be responsible for 100% of the loan
- No interest for 12 months, will be available
It’s now available on the British Business Bank website.
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 a 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 of your accounting date 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
NHS England has said they will pay 1/12th monthly of the 2020-2021 NHS contract. 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 has said associates may need to be redeployed within the NHS during the crisis to provide emergency dental and other care.
Most patients will likely continue to pay into 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.
That said, if associates are receiving capitation money in respect of private capitation schemes, the practice should discuss with associates what happens if the associateship ends before the associate can do the relevant routine dental work.
17 – Coronavirus job retention scheme (wage grants for dentists with a company)
A taxable government grant will cover 80% of the monthly salary PAYE employees and their pension costs up to £125 who would have otherwise been laid off. It will continue for 3 months (extended if required) and will include all workers in employment on 28 February. All employers qualify and it’s backdated to 1 March 2020.
Most dentists with a limited company will operate payroll for their directors and company secretary’s salary payments. For tax efficiency, these salaries are monthly amounts of £1,041 or £719. 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 the statutory self-employment pay scheme (see #20 below) either.
To claim under the scheme you will need to:-
- Identify ‘furloughed (grant leave of absence to) workers’, and notify them of this change and start date
- Ensure furloughed workers undertake no work other than dealing with the company administration like the accounts
- submit information to HMRC about the workers that have been furloughed and their earnings through a new online portal
- continue to pay to report the payroll as usual and under PAYE
There are currently no systems in place for employers to claim or pay this grant. HMRC are urgently working to set up a system. It is expected that one grant claim will be made to HMRC in May for payment at the end of May. Any business needing urgent cash flow are advised to defer tax payments and to apply for a Coronavirus Business Interruption Loan see #11.
There is the option to reduce wages payments by 20% for any furloughed workers. Our advice is to continue processing the wage payments as usual for maximum tax efficiency.
18 – Business rates cash grants for dental practices of £10,000
A dental practice that gets small business rates relief will receive a one-off cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget). Local authorities who pay these grants now have online claim forms available to make claims.
The grant is for the practice owner(s) and is not for passing on to associates.
19 – BDA benevolent fund and budget planner
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 (Statutory self-employment pay scheme)
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:-
- 80% of your monthly net earnings averaged over the last three years
- up to a monthly maximum of £2,500
- for up to 3 months initially
To qualify you must:-
- have profits of under £50,000
- have more than 50% of your income from self-employment
- filed a tax return for 5.4.19
- be trading in March 2020 and want to continue trading after coronavirus
HMRC will contact you to make your claim and will aim to pay the grant as one installment direct to your bank account by June 2020. If you are short of funds the government advice is to consider the #11- Coronavirus business interruption loan scheme.
This scheme does not cover directors or shareholders trading as a limited company.
21 – Extensions to companies house filing deadlines for accounts
Companies House will give automatic accounts filing extensions of 3 months for any company affected by COVID 19. An online application must be made before the due date has passed, you should get a reply within 15 minutes. You can get a similar 3-month extension by shortening the company year-end by 1 day.
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.