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Dentists Who Invest

Podcast Episode

Full Transcript

Dr James: 

And one and all, and welcome to this live stream between myself and David Hossmann, specialist dental accountant. Been looking forward to this one. It’s got a lot of love on the group, hotly anticipated, and we are, of course, going to deliver. Because this is an interesting one and highly relevant to dentists is anything and everything tax, especially with the recent autumn statement changes, which is what we’re going to be focusing on tonight. David is going to enlighten us with those changes and his knowledge and wisdom going forwards on how we can be as tax efficient as possible. Just before I bring David in, one quick thing guys, there’ll be lots of people who are watching this live and there’ll be lots of people who are watching this on the replay. Interesting to know how many people have we got in the house tonight. If you are live on the dentists you invest platform, feel free to go ahead and hit live in the comments box so that we’ve got a really good idea of how many people are here. We can tailor the content that much more if we just know how many people are in the building. And also, as well as that, when we know you’re live, when we know you’re here, when we know you’re in person, well, there will be the opportunity for each and every one of you to ask questions as time goes on. If you are watching this in the replay, go ahead and type replay in the comments, so we get a good idea of how many people are watching the replay as well and going off the original post. There’s going to be a lot in both categories. Also, one more thing to mention you guys are going to want to stick around until the end of this live because we have free gift that we’re going to give away to related to tax, but I’m not going to spill the beans on what. That is just yet, as I say, worth hanging around for the next 20, 25 minutes. That’s how long this podcast will be. That’s how long this Facebook live will be. So, like I say, if you can hang around for those 20, 25 minutes, it’s going to be worth it, because you’ve got a gift for you at the end and they’re going to be a wisdom packed and information packed. 20, 25 minutes it’s going to be a lot of takeaways from tonight as there always is when we do podcasts and lives and content together, isn’t there, david?

David: 

Yes, yes, I don’t think so.

Dr James: 

Yes, correct answer. Anyway, david, there will be people in the audience who know you and the people in the audience who have yet to meet you, so it might be nice for you to do a little bit of an intro about yourself and the people who have yet to meet you.

David: 

Yeah, okay, sure. So dental accountant, which obviously means we do compliance, work your accounts and tags dental, in that we understand the dental sector. We understand what it means to be an associate, to go from an associate to a practitioner, to multi-site owner, to being a situation that needing to sell and all the complications that go with your whole career. So we like to lead off knowing what you do as a dentist.

Dr James: 

Wonderful. Thanks so much and, David, now’s a good time for you to take it away really. On the autumn statement, I’m going to say as little as possible because you want to learn as much as we can about this and I’m sure everybody in the audience is in the same boat.

David: 

Yeah, no problem. So I’ll try my best for 25 minute, james. It’s a bit of an anticlimax, this particular budget, so that we were expecting some things that didn’t come through. So for me, for my overall summary, it is an anticlimax. That said, what’s the main theme of the budget? The main theme of the budget is that we are in a period of high inflation, with a general election on the horizon. So those two things really are the theme summaries of what the government is trying to do not upset the economy that they’ve obviously we’ve seen previously. Keep things steady, but getting that inflation down, because that is a big problem right now, and then again working towards creating growth. So no real big changes. There’s nothing that’s come through that I’ve kind of gone oh, that’s a big change, we need to tell our clients to do things differently. It’s all pretty anticlimax. So we’ve had the cuts in national one national insurance class one national insurance by 2%. Any of that is to put more money in people’s pockets, more spending power. Class two national insurance abolished for self employed, given the tax break there. Class four national insurance cut by 1% from April. So those are two tax cuts for the self employed. That said, you say those are tax cuts and that’s really good news. We welcome that. But on the flip side we usually get an increase in the personal allowance of the basic rate bands, flexing to give less tax at a more tax at the basic rate band. So with inflation so high, those two things really don’t. They cancel themselves. So it’s not really a tax cut. When you look at the overall effect of what’s happening here, oh, bit of smoke and mirrors without one. We knew that the national living way was to go up, so that’s going up to about £11.44 an hour. That’s been made permanent. Capital allowances was the next thing. So we’ve got a situation we’ve had for a few years now where businesses are investing in capital expenses. So for dentists what does that mean? Chairs, cabinetry scanners and so on For companies are fully deductible against profits 100%. That’s called full-expensing. So that was on the cards to be taken off from 2025. That’s now been made permanent. So that gives a bit more clarity that in the coming period investing in assets is fully deductible. So from a tax perspective, investing in those is 100% tax deductible. That’s welcome news. Nobody’s saying otherwise on that. R&d is the next thing the government decided to change. They’ve merged the schemes from April, lowering the rates for loss-making businesses. That was slightly surprising. What was more surprising is they didn’t say how they are going to fix the mishandling of R&D claims. So companies who invest in qualifying research and development get all sorts of tax breaks and refunds for doing that if it qualifies. What we’ve seen in the last 12 months certainly is claims go in and they are not paid out and they are put immediately under investigation, which is taking a lot of time to get those claims released. So that was in my missing from this statement how they are actually going to address that backlog of HMRC not being able to pay out these R&D claims. So that was a bit frustrating. We still know why HMRC are going to resolve that. Next thing announced was an extended investment zone and free port incentives, again going with the theme of how to increase growth and investment in the economy. The pension triple lock was also talked about. Basic state pension increased by 8.5% to £221.20 a week and that’s in line with inflation. There’s a 75% discount on rates for retail, hospitality and leisure companies. That was welcome news for the economy. Small business rates multipliers were frozen for a year. Well, a year is better than nothing, so we’ll take that. The other thing that the budget kind of touched on was benefits. So the government wants to make Working work for people. Part of making work work with people is not paying people who are not looking for work, and that was an area that they touched on that if people are not looking for, their benefits will be withdrawn. Part of that benefit could be dentistry, so lower income families might be affected by that. That said, universal credit is set to go up by 6.7% and then nutshell. That’s all really that we have to talk about on that particular issue. But beyond that the story is well, what does that mean for the economy and what does that mean for dental practices?

Dr James: 

So sorry, james, you want to Paul was going to say amazing. Yeah, and that’s actually how we’re going to take it, what you’ve just said, another layer deeper and make it more actionable and tangible for everybody who’s listening. So, yeah, hyper relevant. Just before we jump on to that, guys, this is a live Q&A. There will be the opportunity to ask questions at the end of this live. First come, first serve. Basis here we throw a question in the chat First is the people that we will get to, so feel free to go ahead and chuck those in the comments. As well as that, once more, you’re going to want to stick around towards the end of this live because you’ve got something free, or David’s got something free that he can give away to everybody in the audience. So worth the wait and without further ado, david, I know you were just about to say then, what does this actually mean for dentists? Because this is how we’re going to make it really hyper specific and hyper useful for everybody in the audience at Dentist Invest.

David: 

Yeah. So the impact of the budget should be so. Now the Office for Budget Responsibilities forecasting inflation to come down to 2.8 by the end of 2024. Now, that’s great. And then forecasting beyond is 2025, that’s 2%. So obviously we’re in a period of high inflation. We’re also in a period of high interest rates. Now, inflation coming down should hopefully mean that interest rates fall over at some point. So that’s putting more disposable income back into patients’ pockets and I think that is needed. We have seen practices go through the COVID boom where people had their holiday money that they decided to spend on teeth and we had a big, big, big boost and shift from into private. We have seen that drop a little and this is good news for the future because we want people to have money in their pockets to spend, especially with private dentistry. The other impact well, national living wage going up. That’s going to mean potentially, staff costs going up for some practices. National insurance coming down again, coupled with the income tax bands not changing, I think there’s not much real extra cash in people’s pockets. So it might sound like it when you think about well as a national insurance cut, but with inflation, the rate it is is not much real spending power for the man on the street. So we’ll see. I think we have to wait and see. We’ve got, obviously, the spring budget coming up and I think there will be more to follow. I think the government are testing the water with let’s see how this is received. You would hope that they start to see that drop in inflation and I think there will be more to follow in March. I’ve not got any predictions on that. I’m waiting to see, like everyone else’s All right, cool top stuff.

Dr James: 

So, as you get wealth, just pretty much what you were saying at the start there nothing like flipping, drastic and completely game changing in there, but certainly some things to consider. And it’s just worth noting that a lot of these changes they don’t kick in until the next tax year, right?

David: 

Yes, yes, most of them are rightful.

Dr James: 

Well, the national insurance is January, but oh, okay, there we are Good stuff, okay, cool. Anything else we should know about the audit statement? Guys, now is your opportunity to ask David any questions. Should you like to know anything, not just about what we said tonight, but also general tax, whenever it comes to your dental practice or whenever it comes to your affairs, whether you be an associate or principal, feel free to DM me those, send me a direct message, a private message. If you want to keep that, well, off Facebook, if you want to keep it off the live itself, feel free to do that. Or, if you’re happy enough, feel free to go ahead and type it in the comment section either. It’s good. Anyway, back to what we were saying. David, anything else we should know, anything else you can think of that’s relevant or pertinent.

David: 

Well, if there’s no questions, we can talk about the dental market. That was another thing we talked about at the total finance conference. I thought If nobody had any questions we can get into that.

Dr James: 

There’s two that have come in on DMs here, but you know what? We’ve got loads of time, so why don’t we go ahead and talk about what you suggested as well? That sounds good.

David: 

Yeah, so the budget is a general economy. Let’s talk specific dental. So one of the things we talked about was and something I recommend all you listeners do is running through the dental market review. So once a year, christian Co, one of the larger and worldwide brokers, do an 80-page report on key things that are going on in the dental sector. It’s about 80 pages and we obviously asked a question to Delagus who’s heard of this report, who’s read it? And the answer was oh, I don’t think anybody had, but it’s a really good read. It tells you what’s going on in the sector and why is it important. A dental practice and stuff we’ve talked about before James is it’s a big asset for people and its value and the way it can be sold will vary depending on the market. So it’s really good to get into that. But see what’s happening in that in the market of buying and selling dental practices, it has changed. It’s been very interesting to watch from going from 2022, which was a very good year if you wanted to sell your practice, you had multiple corpus vying to get you and giving you really good deal, structures and so on Then we go into 2023, and we’ve had interest rates go up A lot of mergers between Roderick’s dental partners, Portman and Dentex. You’ve got less buyers who are spending all their energy consolidating, so there’s less demand. Now Boop has gone through a divestment of getting rid of some practices, and that reflects one of the challenges with servicing NHS dentistry. So what does that mean? It means that 2023 is a rubbish year to sell your practice. Now I know we’re going to the tail end of this thing, but it’s been a rough year for people who’ve been trying to sell because there’s less people buying because of bidding to drive those prices up. Thank you. It doesn’t mean that corporates are not buying. I think we also touched on that. It’s now 38% of the market is owned by corporates, and by corporates that includes large groups obviously your boopers, your odryxes, but your medium groups, with groups up to 30. So that two trench of owners combined is now 38% of the market, which is significant. So that trend will continue. But I think that what we’re trying to say is that when we looked at the data, we could see that really it’s not a good time now for sellers. So that’s a kind of a summary of the dental market, if we can call it that.

Dr James: 

Good to know. Good to know, absolutely Okay, cool. Well, thank you for that, david, and thank you for your wisdom, as ever, and thank you for that little bonus feature that we did just then about the dental practice market even more value, which is always a good thing. So we’ve had a few questions that have come in on DMs, which we’re going to read out in just a minute so that we can get your opinion on these. Certainly, david, I think it’s been very valuable to share with everybody. Just before we do that. Guys, we said that we would give away something on this live for everybody who’s listening, and what David has actually prepared is an ebook. It’s an ebook on how any dentists out there can be as tax-vision as possible, all the areas that you need to hit and look at in order to bring your tax bill down as much as you can and, of course, following every ethical consideration, everything on that front, ensuring that all are ducks in a row, however, ensuring that we’re as tax-vision as possible. If you guys are interested in that ebook, the beauty of it is it’s like a little tick list. You can go ahead and tick each one off and you can ensure that you’ve covered each and every area, which means that you’re comprehensive. You want that ebook. Feel free to go ahead and comment ebook below this video and we can reach out to you with that book. In due course. We can give it to you and what that will mean is that you can benefit from the knowledge contained within it, so feel free to do that. Everybody who is at this live stream tonight, or indeed anybody who’s watching on the catch up as well. We can get back to each and every one of you, as I say, still the opportunity to ask some questions. If anybody finds these it, I’m going to go ahead and crack on with the questions that have come in via DM. So, very first question we got here, david. My first question is I am 28 years old. Someone told me, my friend told me, that this year is not a good year to buy a dunk practice and the market won’t settle for the next five years. Is that true?

David: 

I don’t. I think no, potentially the opposite. If corporates are not buying as hard as they are and that’s that’s certainly the case they’re offering lower multiples. We’re seeing that for sure. So, compared to 2022, 2023, the valuations are slightly lower. So whether that trend continues into next year. But then the thing with buying a practice is you buy it when it’s right. It’s the right time for you. I wouldn’t wait five years for an actual 1% reduction in price. I think that’s not sensible. You do it when you’ve got the right one, and the right one is location. And can I grow it and is it a good return on my money? And does it work? Do the numbers work for me? If it ticks those bugs and you are ready, that’s the time to do it.

Dr James: 

Cool. Thank you for that, david. One more question. We’ve got time for A few people comment from the ebook, which is great to see Still some time to get that book that we talked about just a second ago or indeed ask a question. Guys, we’re going to keep this live stream powerful, impactful and punchy. Tonight we’re going to keep it to about the 20 minute mark. Next question that we’ve got coming in David. I see this question all the time, don’t we, david? I am currently a sole trader, 50% private and 50% NHS. At what point should I think about transitioning to limited company? There’s quite a few variables in there that we need to know, isn’t there, david? But maybe if we just have some high level information on that, it’s how much you need.

David: 

Personally, if you say this, my 50% private is 70 grand and I don’t need any of it and it can go into a company and I can live off my NHS work, you’ve got to think should you incorporate both, because you’ve obviously got the pension superannuation? Superannuation is great. It’s a really good pension scheme. I can’t say more than that because I’m not an IFA. If your NHS is enough to cover your day to day costs and you have a plan to reinvest the private work, then it can work for you. But if you’re going to take it all out, then that’s the key factor to answer Is it right for you or not Is how much do you need to draw from the money you put into the company? If the answer is very little, then a 50-50 split. It could be right for you. It certainly could, but you obviously need to get into the numbers to know what that 50% looks like. How much is it? What are we talking? By all means, reach out after the call or through Facebook and we can have a chat about that.

Dr James: 

Sounds good, okay, well, as I say, we want to keep tonight to 20 minutes or so. To make it as bite-size and as value-packed as possible. Comment up to the 20-minute mark just now. Thank you to everybody who participated in tonight’s webinar, who came along to learn from David, and thank you from everybody on Denysone Invest, from all the audience to yourself, david, for giving up some of your evening to be with us this evening. Like I say, david is accessible on the Denysone Invest Facebook group. If anybody wants to reach out to David, david Hossine, or indeed grab that e-book as well, feel free to pop a comment In the comment section and we can get back to you. David, we’re going to round up now Anything you’d like to say before we part ways.

David: 

No, that’s great. Thanks, james, good to speak with you Good to see everybody.

Dr James: 

Hope everybody has a flippin’ amazing Tuesday evening. What is left of it and we’re going to be back next week for another live. Same time, same place, 6.30pm on a Tuesday on Denysone Invest Facebook group. I’m looking forward to see everybody there. Much love, bye, bye, bye, bye.