Dentist Tax Is Not Like Other Small Business Tax
You run a dental practice. You might be an associate with a limited company, a practice owner with multiple associates and hygienists, or a sole trader with a single surgery. Your tax affairs mix employment income, self-employment income, dividends, and often property income from the practice building itself.
A general accountant who handles a local café and a building contractor will miss the specific reliefs and structures that apply to dentists. They may not know that an associate's contract can be structured through a limited company without falling foul of IR35. They may not know that practice goodwill is eligible for Business Asset Disposal Relief (BADR) if structured correctly. They may not know that the mixed income from NHS and private work creates specific VAT and corporation tax questions.
An accountant for dentists knows these things because they work with dental clients every day. That is the difference.
Why a General Accountant Can Cost You More Than Their Fee
Let us be direct. A general accountant charging £150 a month may save you £50 on compliance. But if they miss one relief, one structure option, or one filing deadline, the cost to you runs into thousands.
Here are the specific areas where a general accountant often gets it wrong for dentists.
Associate Structure and IR35
Many dental associates work through their own limited company. HMRC has been looking at this closely. If your accountant treats you as a standard contractor without reviewing your actual working arrangements, you risk an IR35 investigation.
A specialist accountant for dentists will review your associate agreement, your day-to-day control (or lack of it), and your substitution rights. They will advise whether your limited company is appropriate or whether you should be inside IR35 and paid through the practice payroll. Getting this wrong means a tax bill for unpaid PAYE and NI, plus interest and penalties, going back several years.
Practice Purchase Structure
Buying a dental practice is not like buying a shop. The purchase typically splits into three components: goodwill, equipment, and property. Each has different tax treatment.
Goodwill is eligible for BADR when you sell the practice later, but only if you hold the shares for two years and meet the trading criteria. Equipment qualifies for capital allowances, including the Annual Investment Allowance (AIA) at £1,000,000 per year. Property attracts Stamp Duty Land Tax (SDLT) and may be held inside or outside the company.
A general accountant may treat the whole purchase as one asset. A specialist will structure the acquisition to maximise capital allowances upfront and preserve BADR on the goodwill when you exit. That difference can be worth tens of thousands of pounds.
Mixed Income: NHS vs Private
NHS dental income is generally exempt from VAT. Private dental income is standard-rated for VAT. If your practice does both, your accountant must track the split accurately for your VAT return.
The flat rate scheme can simplify this, but only if you qualify. And if your turnover crosses the £90,000 VAT registration threshold, you must register. A specialist knows the dental-specific rules around partial exemption and the dental flat rate percentage (currently 14.5% for dental practices, though limited cost traders revert to 16.5%).
A general accountant may apply the wrong flat rate percentage or miss the partial exemption calculation entirely. That means overpaid VAT or an HMRC penalty.
The Specific Services an Accountant for Dentists Should Provide
You should expect more than just a year-end set of accounts and a corporation tax return. Here is what a proper service looks like.
Quarterly Management Accounts
Dental practices have high fixed costs: lab fees, materials, staff salaries, premises. If your revenue dips by 10% in a month, you need to know immediately, not nine months later when your accountant files the CT600.
Your accountant should provide quarterly management accounts showing your gross margin, overheads, and net profit. They should compare actual performance to budget and flag variances. This is standard for a specialist firm. It is rare from a generalist.
Tax Planning for Practice Exit
Most dentists sell their practice at some point. The tax treatment of that sale depends on how you hold the practice and how long you have held it.
BADR gives a 14% CGT rate on the first £1 million of gains (rising to 18% from April 2026). But you need to plan for this years in advance. If you hold the practice property personally and the goodwill in the company, the structure changes the relief available.
Your accountant should model the exit tax bill every year, not just when you decide to sell. That way you can make adjustments early.
Pension Planning
Dentists often have high earnings that trigger the annual allowance taper. The tapered annual allowance reduces your pension contribution allowance from £60,000 to as low as £10,000 if your adjusted income exceeds £260,000.
Your accountant should calculate your tapered allowance each year and advise on carry forward from previous years. They should also advise on whether a director's pension scheme (SSAS or SIPP) is more appropriate than a personal pension, given your company structure.
Associate and Hygienist PAYE
If you employ associates or hygienists, you must operate PAYE correctly. Associates who are genuinely self-employed can be paid through your limited company without PAYE, but only if their contract and working practices support that status.
HMRC has won several tribunal cases against practices that treated associates as self-employed when they were effectively employees. A specialist accountant will review each associate's arrangement and advise on the correct employment status. They will also handle the P11D and P11D(b) for any benefits in kind you provide.
What to Look for When Choosing an Accountant for Dentists
Not every firm that claims to specialise in dentists actually does. Here are the specific things to check.
Do They Have Current Dental Clients?
Ask how many dental clients they currently handle. A firm with 20 or more dental clients has real experience. A firm with two dental clients is still learning.
Ask for a referral. Speak to another dentist who uses them. Ask whether the accountant proactively suggests tax planning or just reacts when asked.
Do They Understand the NHS Contract?
NHS dental contracts are complex. The UDA (Units of Dental Activity) system determines your NHS income. Your accountant does not need to know clinical dentistry, but they need to understand how UDAs translate into revenue and how that revenue interacts with your VAT and corporation tax position.
If your accountant cannot explain the difference between UDA income and private fee income on your management accounts, they are not the right fit.
Do They Use Dental-Specific Software?
Most dental practices use software like Dentally, Software of Excellence (SOE), or R4 for patient records and billing. Your accountant should be able to connect your practice management software to your accounting software (Xero, QuickBooks, or FreeAgent) so that revenue data flows automatically.
If your accountant expects you to export CSV files and email them every month, they are working with outdated processes. That adds cost and delay.
The Real Cost of Getting It Wrong
Let us put some numbers on this.
A dental practice in Manchester with three associates and two hygienists turns over £620,000. The owner takes a salary of £12,570 and dividends of £70,000. The accountant files the corporation tax return and the VAT return. That is the baseline service.
A specialist accountant for dentists reviews the structure and finds that the owner can claim capital allowances on £45,000 of new equipment purchased last year. The general accountant missed this. The corporation tax saving is £11,250 (25% of £45,000).
The specialist also identifies that the owner's pension contributions were tapered incorrectly, and that £18,000 of unused annual allowance from three years ago can be carried forward. The owner contributes this to a SIPP, saving £7,200 in higher-rate tax relief.
Total savings from the specialist: £18,450. The annual fee difference between the generalist and the specialist is perhaps £1,500. The specialist pays for itself twelve times over.
When Should You Switch Accountant?
If any of these apply to you, it is time to review your current arrangement.
- Your accountant has never mentioned BADR or exit planning.
- You do not receive management accounts or any regular financial review.
- Your accountant has not reviewed your associate contracts for IR35.
- You are paying VAT at the wrong flat rate percentage.
- Your accountant has not discussed pension carry forward or the tapered annual allowance.
- You are filing your own VAT returns because your accountant "does not do that".
If any of these sound familiar, speak to a specialist firm. Our ICAEW qualified team works with dental practices across the UK, from single-associate limited companies in Bristol to multi-surgery practices in Manchester and London. We know the reliefs, the structures, and the deadlines that matter to dentists.
How to Get Started
Switching accountant is straightforward. Your new firm handles the professional clearance letter to your old firm, requests the accounting records, and takes over from there. There is no disruption to your practice.
We offer a free initial consultation for dental practices. We review your current structure, your tax returns, and your goals. We then tell you what we would do differently and what the savings would be. No obligation, no hard sell.
Contact us to arrange a call. Or use our online calculators to estimate your corporation tax, dividend tax, or BADR savings before you pick up the phone.