Covid-19 has raised many questions and uncertainties for the dental profession. Over the next few weeks, Shoaib Khan of Alexander & Co Chartered Accountants, will be outlining the financial implications of Covid-19 for dental professionals, with advice on how to navigate these challenges.
In the first article of the series, Shoaib will discuss the assistance available for self-employed dental professionals affected by Covid-19.
Keep an eye out for future articles with more expert advice on how you can tackle the financial consequences of Covid-19.
Mr Shoaib Khan | Tax Advisory
Alexander & Co Chartered Accountants
Shoaib Khan is an experienced member of the tax advisory team with Alexander & Co based in Manchester. Shoaib specialises in advising individuals and owner-managed businesses on their personal and business tax affairs. If you need assistance with your tax affairs, Shoaib can be contacted at firstname.lastname@example.org.
The aim of this article is to provide details to self-employed Dental professionals useful information on the Government’s self‐employed income support scheme (SEISS).
Under SEISS, Self‐employed dental professionals, who meet the eligibility criteria, should be able to claim a taxable grant worth 80% of their average trading profits from 2016/17, 2017/18 and 2018/19 tax years (i.e. the last 3 tax years). The SEISS grant is up to a maximum of £2,500 per month for an initial three‐month period, covering March 2020, April 2020 and May 2020.
Who qualifies for the scheme?
HMRC guidance sets out the following criteria for individuals to qualify:
- You were self-employed during 2018‐19 tax year and have submitted a return on that basis (if your tax return is still outstanding, this must be submitted to HRMC by 23 April 2020);
- You must have been self-employed in the 2019‐20 tax year;
- You must be trading as self-employed when you apply for SEISS, or you would have been except for the COVID‐19 pandemic and you intend to continue to trade in 2020‐21 tax year;
- Your self‐employed trading profits must also be less than £50,000 and more than half of your income comes from self‐employment. This can be with reference to at least one of the following conditions:
- Your trading profits and total income in 2018/19
- Your average trading profits and total income across up to the three years between 2016-17, 2017-18 and 2018-19.
In determining the eligibility for SEIS, HMRC will only use self-employment information submitted in your tax returns for between 2016-2019.
Help for self‐employed workers – UK dentists
Whilst the Government has announced that this support will cover 95% of the UK’s Self‐Employed workers, it is not available to those workers who earn more than £50,000. With the average earnings of an associate Dentist at £69,000, a lot of whom will be self‐employed, it is therefore disappointing that the support will not be available to all Dental professionals.
Some Dental professionals may not have been working for three years and for those who started between 6 April 2016 and 5 April 2019, HMRC will use only the profits for the years for which a tax return had been filed, an average profit level over that shorter period will be calculated and this will be compared with the £50,000 annual limit.
It is, therefore, possible for Dental professionals with trading profits of less than £50,000 to benefit from government support. The British Dental Association has written to the Chancellor of the Exchequer on 26 March 2020, specifically requesting to extend the SEISS to ALL self‐employed individuals and remove the maximum £50,000 limit. Furthermore, the Association of Taxation Technicians has also warned the Government that not all of the UK’s 5 million self‐employed workers are covered under the SEISS. At the time of writing this publication (2 April 2020), the Government had not extended the support to all self‐employed workers. However, readers will note that the Government’s guidance and support are changing rapidly as the impact of COVID‐19 becomes apparent on individuals, businesses and the UK population. We are awaiting further information from HMRC and we will provide updates, as applicable, on our website (https://alexander.co.uk/coronavirus-business-guidance/).
Income Tax Payments
For those anticipating financial hardship in the meantime, it will be welcome news that all self-employed Dental professionals who have income tax payments due in July 2020 can defer these payments until 31 January 2021. The deferral is automatic, and you do not need to contact HMRC to arrange this. Furthermore, HMRC will not apply any interest or penalties should you chose to defer the payment.
Caution needs to be exercised here; whilst the payment for July 2020 can be deferred, it will be due in January 2021, together with a balancing payment for 2019/20 tax year and the first payment on account for 20/21 tax year. Individuals should, therefore, consider their circumstances carefully and consider making some payments if possible, to reduce the tax burden in January 2021.
How to apply for the SEISS
HMRC will use tax returns already submitted to contact those individuals who are eligible and invite them to apply online. HMRC are in the process of setting up a system for SEISS and further guidance on how to apply should be available in due course.
When will payment be made, and how much will you receive?
SEISS will be paid in one installment, directly into your bank account, in June 2020. As mentioned above, the grant is worth 80% of your average monthly trading profit over the last three years (up to a maximum of £2,500 per month).
What if you have a personal service company?
Those who pay themselves a salary and dividends through their own company, at the moment, these dental professionals are not covered by the SEISS scheme but should be covered for their salary by the Coronavirus Job Retention Scheme. However, HMRC guidance is not yet clear on how this might operate for professionals delivering their services through a personal services company.
How we can help
Alexander and Co offer a full range of accountancy and tax services, including assistance in preparing and submitting your 2018/19 tax return, calculating your future tax liabilities to assist in you planning your income tax payments, as well as preparing forecast income statements to support any finance applications. For individuals that believe they are eligible for the scheme and have not been invited, we are able to check eligibility on their behalf. Please get in touch with one of our experts in the Dental team: email@example.com