The 60% tax disincentive for higher earning dentists
Ross Brooke Dental
Special accountants dedicated to dentists & orthodontists, offering all services essential to dental business, and more.
Our analysis of the Spring Budget 2024 on behalf of NASDAL covers National Insurance Contributions, income tax-related personal allowances, changes to the Child Benefit system, the abolition of the favourable Furnished Holiday Lettings regime and a reduction in income tax on the sale of second homes or rental properties. This article delivers the key points of the Budget.
National Insurance Contributions (NIC) are due to reduce next month (April):
·?????? From 10% to 8% for employees
·?????? From 9% to 6% for the self-employed
However, the additional 2% rate on earnings over ￡50,270 stays in place.
The threshold for personal allowances remains frozen. ?
Those earning between ￡26,000 and ￡60,000 will be better off in the 2024-25 tax year, gaining more from the reduction in NIC than they lose in income tax due to the threshold freeze. The Chancellor plans for the threshold to remain static until 2028. By freezing the thresholds which determine when taxpayers start paying NIC and income tax, however, higher earners lose out. Under the current income tax regime, higher earners lose their personal allowance once they bring home more than ￡100k. Doctors and dentists earning between ￡100 and ￡125k effectively pay tax at 60%, a disincentive to full-time working.
The Child Benefit system
A change to the Child Benefit system will positively impact dental team members with families. The full amount of child benefit will be paid to families where the highest-earning parent earns up to ￡60k – the current threshold is ￡50k. Families where the highest earner earns up to ￡80k will be paid partial child benefit.
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Furnished Holiday Lettings.
The tax advantages of owning holidays lets are to be scrapped from April of next year - but how they transition to existing property income taxes is still not completely clear.
A decrease in the top rate of CGT on the sale of second homes and rental properties.
For those thinking of selling, the decrease in the top rate of Capital Gains Tax decreases from 28% to 24% .
?For more analysis, visit out website: https://www.ross-brooke-dental.co.uk
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