Dentists Who Invest

Podcast Episode

Full Transcript

James: Hey everyone. Welcome back to the Dentists who Invest podcast. Today I’m here with Bilal Ahmed to do a hot take on Liz Truss’s most recent mini budget. Bilal, how are you my friend? 

Bilal: I’m very well James. Very well, James. How’s it going? 

James: Good. Thank you. So you know what, this is going to be a hot take, so let’s go ahead and just jump straight in with the facts. So we’ve got a list of things that we want to get through here today. We want to cover every single one so that know that we know that we’ve been systematic about it and we know that we’ve basically covered every single point of change in this budget. So let’s go ahead and jump in with Corporation Tax because there’s been some changes there. I believe I’m correct in saying, 

Bilal: You are so well, I think the first thing is we had a catch up yesterday. And we’re trying to keep the politics out of this as best we can. And, hot takes will stick to the facts and try and keep the emotion out of it. So, corporation tax? So, it’s not that it’s changed, it’s going to remain unchanged. So it was proposed under Rishi Sunak, government, or the government that preceded Liz Trusses. That corporation tax would be increased into 25%. So that would be 25% on profits over,, 250 grand. With stepped increases along the way between 15-250 grand. That’s now been abolished. It’s not going ahead. That was due to come into effect from April next year. So corporation tax is quite firmly staying at 19%.

James: And you know what? I was going to say that is a huge change and that’s actually a key theme with a lot of these taxation adjustments. Basically, there is some wholesale, sweeping, massive tax cuts that have been enacted here, and they’re pretty grand in nature, but yes, corporation tax is one. Of course anybody earning over 250K, so that will be most dental practice really will breathe in a sigh of relief. 

Bilal: It’s huge. So when we were doing our calculations for anyone that wanted to switch to limited company, we were being prudent and we were putting it at 25% and the changes were huge. I mean, it’s an impact of light between four and five grand at certain levels, like 250K. The numbers are huge. So, a lot of people were breathing inside sigh relief at this point. 

James: 1000%. Let’s jump on to income tax now because there’s been some change there of course as well. 

Bilal: Huge changes. So, this is probably the single biggest change that certainly I have come across and will benefit a lot of people in certain income tax brackets. So the first is, we all know the first 12 and a half thousand pounds you earn his tax free. And between 12 and a half thousand pounds to 50 case tax, that 20%. That’s now being reduced in 19%. So it’s 1%, but it’s still, you know, still more money in your pocket. And then between 50K and 150K, you were taxed that 40%. Anything over 150K you were taxed that 45%, that 45% bracket’s now being removed and it’s just going to be a straight 40% for anything over 50K and 19% up to 20K. 

James: Holy Moly, and just to be totally clear, these kick in from the 6th of April, 2023. Is that correct? 

Bilal: Correct. Everything we’re discussing other than national insurance will all be from April next year.

James: Right. Lovely stuff. Cool. Again, massive changes on income tax. And you know what, this is something that we need to cover. How does this change our limited company versus sole trader position? But we’ll, we can do that now where we can do that a little later on. 

Bilal: We’ll go into that a little bit later on. So I think one of the other big change, certainly from an income tax perspective is national insurance. So national insurance rates went up this year by 1.25%, and the thresholds also moved. So what we haven’t got visibility of if they’re unwinding the thresholds as well as the increase. But so far it looks like the thresholds are staying where they are. So the amount on which the national insurance is deducted on has increased and it will stay where it is. The banding is staying where it is, but that 1.25% increase is now being unwound. So where you were for sole traders paying, well, you would’ve paid 10.25% up to 50K this year and 3.25% thereafter. It’s now staying at 9% up to 50k and 2% thereafter. 

James: Okay, so another reduction. 

Bilal: Yeah, that national insurance decrease is coming into effect from sixth to November, 2022. which for those who are on PAYE you’ll see the benefit in your November pay packet. For sole traders, we calculate your taxes annually anyway, so whether there’ll be a blended rate for this year, or it’ll be the whole 9% and then 2% we’re yet to see what impact that’ll have.

James: And you know what, Here’s what’s interesting and here’s what’s just popped into my head. It’s not too late for them to backtrack in a lot of these changes because they have been controversial. Nothing’s actually changed as yet. It’s just that it will change, right? 

Bilal: Correct. So, nothing as of right now other than the stamp duty, which we’ll go into in a little while. But, all these proposed rates, so national insurance kicks in from the 6th of November. Everything else is from April next year. 

James: Top stuff. The other, the other big hitter to our personal wealth or another source of our personal wealth dividends because we love taking dividends out of our limited company. Right. How have they adjusted, being adjusted or changed? 

Bilal: So, in the background, I’m not sure if people are aware of this, but dividend rates also went up by 1.25%. So where it was 7.5% up to 50k, it went up to 8.75%, and then it was from 32.5% up to 33.75%. And then anything over 150K was up 39.35%. Those 1.25% increases of being unwound, so it goes back to 32.5% over 50K and 7.5% up to 50K. So a nice saving again. The second thing is that additional dividend rate over 150K is now being abolished as well, So it’s going to be a straight 32.5% for anything over 50k. 

James: Wow. Okay. And we have a stat that we wrote down here, didn’t we? Maybe you can recount it from memory or I can read it out. 

Bilal: So, if you are operating by company and earning around 200K and taking everything out, you’re now going to be about, two grand, better off. , to give you sort of the balance on that, if you are a sole trader earning 100K with a new tax changes, you’re going to be around 1500 quid better off. If you’re a sole trader earning 200K a year, you’ll be around 5 grand better off. With the fact that you’re not paying 45% tax over 50K and you’re paying the lower rate of, national insurance as well. So I mean, you’ve seen this all out everywhere on social media and certainly in the press is who benefits from these tax cuts?

James: 100%. And should we, so you might have just said this just then, but should we change how much we take as a salary out of our limited company, or really does that stay the same? 

Bilal: So, it’s an interesting point, and I sort of put it in there as a curve ball is, if you are paying 19% income tax up to 50K, and the company’s paying 19% corporation tax, the two just net out now. And then, depending on the number of employees you have, the first 5K of your employees national insurance is covered by the employment allowance. The second thing you got to consider is then your, Well, the third thing you got to consider is your national insurance impact. That says, is it worth you paying the national insurance? Then get, you know, state pension qualification, things like that. So it might be a good time to revise, Well, certainly for the next tax year, how much salary you’re actually taking out the business. 

James: Well, if I’m right in saying, you know, when you pay your corporation tax and then you take your dividend side on top, so obviously that’s going to be 19%, and then seven and a half percent on the remainder, the effect of tax rate is around what, like 23-24% anyway.

Bilal: Yes.

James: Correct. But then of course, those people who want to get more wealth in their personally and for their ISO or what have you, they’ll still likely want to proceed with dividends, but just worth considering, as you’ve said. 

Bilal: Yes, and it depends on how you’re set up. You know, number of employees. Do you want to make sure you’re making the minimum contributions to contribute toward your state pension? because you need to have 35 years worth of qualifying national insurance payments. So, you know, paying no national insurance doesn’t qualify you for it, so you might wanna pay some. So you might wanna start thinking about adjusting how you, how much salary you’re actually taking out the business. 

James: And that threat, just to quickly tangent, that threshold for national insurance when it kicks in is still what, 8.5K.

Bilal: The employer’s national insurance, it’s after about 791 pounds a month. And then for employees it’s, it’s that 12 and a half grand. It’s gone up to, for directors, it’s about 11.9 K. 

James: Okay. I didn’t actually know there was more caveats to it than that. That’s interesting. 

Bilal: Yeah, it was straightforward.

James: And what is it again? You’ll know better than me. 2K of tax free dividends before you pay seven and half percent. Right? 

Bilal: Correct, So it staggers on top of your 12 and half grand. So if you are taking a nine-ish grand salary from your limited company, you’ve still got part of your 12 and a half grand personal allowance. So if you are taking 50K outlets for simple math, say it’s 10 grand, salary, 40 grand dividends. The first 10,000 pound you earn is tax-free cause it’s within your tax-free allowance. Then the first two and a half grand of dividends still puts you within your 12 and a half grand, allowance. You then get an additional two grand allowance, so the first 14 and a half grand and becomes tax free. Anything between that 14 and a half round to 50 k then gets taxed at 7.5% or will be taxed at 7.5% from April. 

James: Right. Okay. And the reason that you stick to 10K in terms of wages is to minimize national insurance, is that right? Rather than go fully to 12.5k? 

Bilal: Correct. So, we do the calculations of background that says, there’s a couple of things in and around that as well that says if you are a sole director of your limited company, You got to pay both employers, national insurance and employees national insurance, and you can’t claim that 5K grant, the employment allowance if you are the only employee and you are the sole director of the business. So we then work out, depending on how many employees you’ve got, whether it’s worth paying that national insurance and how much national insurance you need to pay. And then you’ve then got to make those payments to HMRC every month as well. That says if you miss out, then you look at interest payments and fines that says some people just don’t want the headache. Which they’ll just say, Just put me right up to the threshold where I don’t have to do anything. I know I’m losing that on about 190 pounds worth of tax efficiency, but it’s not worth it across the year, 190 quid. I’m not gonna lose sleep over that. But it does mean I don’t have to stay on top of that admin fees. 

James: And one final thing, just so we can make this crystal clear. Let’s say you take a waged 12 and a half K plus one pound. You with me, right? Then that just pushes you into the basic tax bracket, right? If you take dividends after that point, do you still get the two K free allowance? 

Bilal: You always get two K? Everyone gets a dividend tax free allowance. 

James: What you’re saying is that if you take purely dividends, then it’s actually 14 and a half k.

Bilal: First 12 and half, then two grand after that. So you always get your 12 and a half K. The dividend allow sits on top of that. 

James: Right. That’s, that’s the part that was the missing link right there that I was piece trying to piece together. Okay, cool. All right then. So now that we’ve done that in loads of detail, personal tax changes in loads of detail, let’s revert back to our question that we proposed earlier, Limited company versus Soul Trader. How is the age old argument adjusted because of these changes? 

Bilal: Massively so. How we approach it hasn’t changed, but if you think about it now, where your national insurance come down by 1.25%, your income tax up to 50k has come down by 1%, it closes the gap on what you save. So your corporation tax is staying at 19%. The dividend tax is also coming down by that 1.25%. So, we, in the round, we work it out, but the gap is now smaller. So I see it all the time on the Facebook groups that says it’s not worth being a limited company. Until you earn 50 K, 80 K, 90 k, a hundred K, 200 k, the numbers are always different, but it’s all, it’s, the answer’s always the same.

It’s not worth being a limited company if it’s not worth it for you. So the answer’s always intrinsic, but we’ve got some numbers here that says on 50,000 pounds, if you are considering going, limited company, the savings gone down to about nine hundred quid that says, Is it even worth it at that point? Because let’s say you are a majority NHS dentist and you are currently in the pension scheme. You, you’re currently enjoying the superannuation, the pension contributions on what you’re earning. And then things like if you’re a female dentist, things like the maternity pay because you get sick pay either way, so that doesn’t really come into it. But if you’re earning 50 K and you operate by company, is the 900 pound saving worth it to opt out of those benefit? So, it changes the conversation again. And then nine required on 50 K, you know, could I even justify, could I even save you any money on that? Because you pay additional accountancy fees, to the accountant to run it. There are additional bits and pieces you could put in the background. Things like, you know, the gift allowance, the Christmas, the, the Christmas party allowance, company cars and things like that. But these are all cherries on top, not the main reason to do it. But at 50 K, you’re savings about 900 quid. At 60 K, you’re saving about two and half grand. At 80 k, the saving drops to 1.9 K. Why does it drop? Because you’re now in the higher bracket of 32.5%. So you’ve paid 19% corporation tax. You’re then paying 32.5%,, dividend tax to access that money. So your proportion shift the other way. And then at hundred K, you’re saving 1.2 K. And this is assuming you’re taking all the money out of it.

So if your lifestyle, and your mortgage, you want to max out your, and things like. If all of that comes down to everything you earn, you know, whenever we do these conversations as well, we say, Look, be realistic. What are your living costs? You know, your mortgage, your car payments, your lifestyle payments. And the one everyone forgets when we do these conversations is how much you set aside for holidays. Cause you all want to go away. We all work really hard. So, you know, how many holidays do you tend to go on a year? How many holidays do you want to go on a year? So if your holiday budget a masses to 10 grand, and you wanna take that 10 grand out, the limited company, you’re gonna be paying 3,250 pounds to access that cash. So we also factor that into the conversation as well, that says, How much money do you need to live off comfortably? You work hard for it, what do you wanna do with it? And if that 100K means you need all 100K. Then you’re only saving 1.2 K in tax. So again, is it worth it?

We’ve done this conversation to death, but with effective tax planning, there are other ways and means to minimize your taxes legally, but things like your share structure, who owns shares within your business, but it all comes down to how much do you need to live off, what do you wanna do with the money? So, I think, you know, the savings are less pronounced as they used to be. It used to be sort of around 3-3.5 grand. But it’s just sort of the gap on a, like, for like basis is just getting smaller and smaller. So it comes down to really one question, which is what do you want to do with the money? 

James: Right. And those numbers that you call it just then, just to be clear, those are tax, those are cumulative savings across your limited company and your personal wealth, or is that just, that’s correct. Is it? 

Bilal: That’s correct. So as a sole trader, obviously, if you earn 60 K after expenses, then you pay the tax on that limited company, assuming you need all the money out. Company makes a 60 k, pays you a modest salary of nine ten one, whatever, whatever we set it to. That then reduces the corporation tax. We put corporation tax into the calculation. We then assume you take the rest of the money out, you pay income tax and that. So those combined figures, so your sold trader taxes versus your dividend, dividend and income tax and corporation tax on 60 K is about two and a half grand saving.

James: Just to make that crystal clear because otherwise it might have been, came across as a personal tax saving, not accountant for the corporation taxing, but it’s everything overall. Right. Okay. Cool. That’s good info. Thank you for that. Awesome. All right then. So next item on the agenda. IR 35 

Bilal: Before we jump into that one. So we talk a lot. What do you wanna do with your money? So again, our stance on limited companies hasn’t changed. So, and we will go into IR 35 as a big caveat to all of us, but our stance on limited companies hasn’t changed. Now, other accounts might have different opinions, but our stance on limited companies is unless you have a specific goal for that money that you are leaving behind, cause that’s where you save money operating by a limited company that says, I make a 100K, I can quite comely live off 50k . What do we do with the rest of the money that lives in the company?

So historically, Again, in that scenario, if you earn 100K and you live off 50, so your income, your self assessment national is 50 grand, which is a mix of dividends and your salary, you would’ve been saving in and around 13K. That savings now dropped to about 12K, so you’re losing a grand, but you’re still saving 12 grand. . So the mechanism by which you should be considering a limited company hasn’t changed. It’s just decrease the savings. But I would still take a 12 grand saving as opposed to, you know, Yes, I’m losing, I would’ve got a 13 grand saving, but I’ll still take a 12 grand saving. That’s a real cash saving that then leaves money in the company. I think about 30K in the company. And we only really advocate limited companies if you have a specific purpose for that money that says, I wanna accelerate my investment goals. You know, things like, you know, working with James and, and working out where, where to put your money because we don’t give financial advice. You know, do I want to be investing in property? Do I want to be throwing that money into a sip tax efficiently? All that kind of stuff. But you’ve got to think about these things before you consider the age or question of limited company versus sole trader. which then, goes on to, as James rightly said, IR 35 because this is still a massive caveat and a ring fence on whether you can even operate via an limited company. 

James: I have one tiny thing to say. Just before we jump onto that. You know, here’s the thing. We’re having this conversation about how all of a sudden that basically it’s not as lucrative to go to become a limited company. We’ve got these huge. Tax savings. You know, what we have to consider is that if we’re going to revert to the mean, and this is a period of low taxes, do we want to make a snap lifelong decision based on something that’s likely to, if anything, go up, considering that this is something that a lot of people have being vocal about their disapproval off, you know, is it really is all of a sudden if we’re, if we don’t want to get a limited company or we’re thinking about getting a limited company, should we really base our whole decision based on this one mini budget? Is that a question?

Bilal: That’s huge. You’ve very much spoken to, my ethos here is snap, judgments on one off events tend to not yield the best results. , which is why we take a wider view over the next couple of years that says, with the way property prices are going with the way your cost of living’s going. You know, you might think you need 50K. 50K will be sufficient enough to live off now, but what if the tax will change? Will you need access to the cash? What big life events have you got coming up? If you’re in a situation where you’re not going to move, you’ve got no big life expenses, you’re more than comfortable living off the money, we can take the money out tax efficiently, then it’s still a really good idea because you’ll still save money doing it. You won’t save as much as you did last year.

But you know, the savings are still in the tens of thousands pounds depending on how much you earn. If you are looking to make a, decision in the short term based on what’s happening now, James, you rightly say it could yield disastrous results when you unwind it in the future.

James: It just popped into my head when you were talking then just something to consider. 

Bilal: Massively, 

James: So anyway. Onwards, IR 35. 

Bilal: So again, this is my geek career here. I’m a massive IR 35 hobbyist when, so when I put a post and said it’s great news for contractors, it is great news for contractors because, IR 35 will sort of take it in steps is the reform that came into 2020, April 20-21 across 2017 April 20-21, which governs whether you can operate via limited company or not.

Now, we’ve done a whole podcast on this, so you can go back and listen to that, but what does it all mean? What’s changed is, in April 20-21, 2017, the obligation was based on the, I say employer with massive invert because they’re not employers, but the person issuing the contract to make the IR35 assessment that says if I’m recruiting for a dentist and James wants to come to work for me, James wants to operate via limited company, I say no, because when I’ve done the assessment, you are ring fence as an employee, it means you cannot operate as a limited company. You have to stay as a sole trader. Pay national insurance, pay taxes. That’s the only way I can take you. Now what’s changed is, what’s changed is I don’t have to make that assessment anymore because the obligation on me is no longer there and the risk to the person issuing the contracts, the risk to me as the person, looking for a dentist in that scenario was, if I wrongly assess James, , to say he is not an employee. He can operate by limited company. I would then be liable for the national insurance contributions and about unlike 100K, you’re looking at sort of 15.5% on anything over, it’s about nine, nine bit grand, which is about five grand. This is huge number, huge risk to me. I don’t need to take that risk. So whether you says a soul trader or not has no bearing on me. It’s, it’s your personal taxes.

So I say you can’t operate by a limited company and, there’s corporates out there that have just made that blanket assessment that said, you cannot operate by limited company. That assessment has now changed and unwound, and they’re now welcoming the conversation. The issue is the obligation’s now on you. So you still have an IR35 assessment to make. 

James: This was in the mini budget? 

Bilal: This was in the mini budget, 

James: okay. I’m all ears 

Bilal: It’s huge. So there’s a couple of things here then. And we’re gonna use the term employer, but work with me here or I’ll just use dental practice. To be fair, it might be easier to remove ambiguity. So the dental practice no longer has to make the assessment on whether you operate via limited company. However, you still have to assess whether you’re an employee. So, I use this example all the time that says if it walks like a horse, talks like a horse, eats like a horse, it’s a horse. It’s not a zebra for tax purposes. So you’ve got to assess whether you are a horse or a zebra. Other animals are available. That says, and the biggest issue with all of this is, you’ve paid the wrong taxes. So if you are not an, if you are actually an employee, you don’t have the right levels of control, then you can’t be operating via limited company, which are often referred to as PSCs or personal service companies. What that means you’re a one man band operating via limited company because it’s tax efficient to do so. So there’s still some assessments you have to make. So, can you send, So if I’m taking on, James, can you, James, send in a replacement to do your work?

Now I just want a suitably qualified dentist to be able to pick up your diary if you can’t work that day. So if you’ve had a very strenuous PT session in the morning and you need the day to recover, can you send someone else in to go and do it? And you can’t send bill because I’m an accountant, but you can send someone else in. Can you refuse work? That says you’ve got eight patients in your diary today. You cannot be asked to see three of them, so you cancel the three. I’ll just see this, does the practice have to give you work? So is there any mutual obligation for the practice to give James work? And does James have to take it? So does the practice have to give James, 20 patients a week? If not, then fine. And then the last one is, do you govern how you work? Do you set your own treatment plans up? Do you govern how, what materials you use, the treatment plans, , how you work, when you work, how many sessions you do that over? Is all of that in your hands? If you can answer yes to all those questions and can you refuse work? And as long as you are, long as the practice doesn’t have to give you it. So it’s like, yes, yes, no, yes. , then your outside of IR35, which means you can operate via limited company because you have that control now, and I use chemical plumbers because this is the most popular in case with IR 35 is , plumbers fell down on one test, which was the unfettered right substitution. Now unfettered right substitution means James can send any dentist in what Chemical plumber said was they can only send in another plumber from chemical Plumber’s network.

That was, a tongue twister that I actually get, that I’m quite proud of myself. But , so, because they said they can only send in another plumber from Pinnacle Plumbers. They felt they actually fell down on the IR35 test and, the whole thing went against them because of that one test.

Now, if you look at DPD. DPD went through the same thing, but the logistics companies have all gone through this. They’ve said as long as you’ve got a driver’s license and you’ve got a clean, you’ve got clean license and you satisfy those checks and you’re legally able to drive and you’ve got sort of the necessary appendage to go and do it, then it’s completely fine. so it’s not saying you have to use another DPD approved driver. So that keeps them out there. So this is where sort of the unfettered right substitution comes into it. So you still have to make the obligation. So all that’s happened is practices no longer have to take that sweeping statement to protect themselves. You still have to make the assessment to protect yourself. 

James: Interesting. Okay. So what you’re saying based, , all of those things that you said there, that it’s pretty feasible that lots of associates are the position that they can say yes to all those questions, but it’s just making it crystal clear. Is there some sort of documentation you need to have of that? 

Bilal: Yeah, there’s a couple of things you can do. So there’s a HMRC CEST tool. So just check employment status tool on HMRC website. You can just google CEST tool and use that however, and again, big caveat on that is even when people have done that, and even on using HMRC’s tool has come back and said, Yes, you’re outside of, by a 35, you can operate by a limited company that hasn’t stood up in court, which is weird. So you use their tool. They only ask a couple of generic questions and the way you go now there’s a service you can use and we can set you up with it. We don’t sort of take any commission on that, but the company’s called IR 35 Shield. What they do is aware, not affiliate to them in any way, shape, or form, but what they will do is ask a more in depth list of questions and you have to be very truthful. They’ll give you something, they’ll give you an indemnified response that says, As long as you’ve been truthful and as long as you’ve done everything you can to, to answer those questions, honestly, the assessment they then give is indemnified that says if anything happens on the back of it, you’ve got an insurance product that cover you.

James: Wow. 

Bilal: Yeah. Now there’s some steps you have to take when operating by a limited company is things like basic things that will catch you out that says you’ve done all of this, you’ve checked your IR35 status. You’ve, you’ve made sure everything is above board. You’ve made sure you satisfied those questions and you have the unfettered right substitution, all of that when it comes right down to it. If you’ve not updated your contract with your practice, and it still says the contract is in Dr. James Martin’s name and not James Martin Limited. You’re falling down the test straight away. 

James: Okay. 

Bilal: So you have to be all over this. You have to make sure your contracts are updated, especially if you do , the more what’s becoming more popular is putting my sole trader and my limited company so my NHS there’s a sole trader. My limited company goes into a private limited companies. So a private goes into a limited company. So I save the taxes that way. If you’ve not got two contract, With the practice you work with and they know they’re dealing with two separate engagements, then you fall down to that test as well.

James: What about if you don’t have a contract? Full stop. 

Bilal: It probably works in your favor, to be fair. , 

James: There we go. 

Bilal: There’s nothing to say that, there’s any documentation that supports that, but we assume most people have contracts and then you need to update your contracts accordingly. And then things like your indemnity is making sure you indemnity are aware of these kind of things, but it’s not a free for all. Don’t go out setting up limited companies willy nilly. You need to take those necessary steps to check that. So, you know, the flow of this conversation was, yes, income tax rates are changed, budget update, . Everything’s moving in the direction , for tax savings and reducing the amount of money you have to pay out but there’s still responsibilities and, and considerations you have to make before you get there. 

James: That was flipping gold dust. I’d never heard, I had not heard that prior to this point. The whole onus was on the tax savings, but not this little change to IR 35 that they snuck in through the back door. Why do you think they did put that in the budget?

Bilal: It just means more people because it stimulates, it should theoretically stimulate growth because what happened was, when a lot of people had to give up their limited company status, they ended up working for higher salaries. So the salaries they got with the companies, they were employed directly, then compensated them for that but it still didn’t work out in their favor. You know, they were still potentially worse off overall but sneaking it back in then means people can be more entrepreneurial with the way they work, which should theoretically stimulate the economy. That’s my hot take on it as opposed to the official line.

James: Interesting. Okay, cool. Let’s shift gears a little bit onto Stamp Duty and the changes there.

Bilal: His luscious locks and doesn’t end up the way argue. So, that duty changes now. For me personally, before we go to the numbers, I don’t understand why this has happened and I don’t get why they’re trying to stimulate an already buoyant market, and you know why they did it is up for debate, but ultimately, We’ll go through the changes first. So, the threshold has increased, So it was 125k, it’s gone up to 250K, so 250 grand for everyone. Stamp duty threshold has increased, meaning you don’t pay any stamp duty until you hit 250 k. For first time buyers, it’s increased from 300 k to 425 K. So if you’re in the process now of about to buy a house and you are in that threshold, you’ll save money now. So a friend of mine was, in the process of completing and I think his stamp duty, he’s just saved five grand on his stamp duty though he’s about to pay out, which is brilliant for him. Again, the argument being that five grand will just go back into the wider economy. So we’re still going to spend that five grand. You’re still going to buy sofas, carpets, doing the house of paying builders, or you might get those windows now.

So that’s where the idea is. That’s where the logic is. So I get that bit, but with the way mortgage rates have gone, Can you even get the house that you want? You know, prices, prices, debt, debt repayments gone the other way. Which again, right back to the start of limited company is with the amount of money you need to take out the company, you really need to consider these things in the short term. Just on for first time buyers, the maximum value on which first time buyers relief can be claimed is increasing from 500 k to 625 K. So it’s 125 k bump up on all the thresholds.

So it’s great news if you’re looking to buy a house and you’re going about and there was a question asked on the group recently as to whether you should sit tight and, or ride it out or just buy the house you want. And I think the advice on the back of it was good is, look, if you find a house you want to live in and you love it, , and you want to buy it, go ahead and buy it. And a phrase that you use, James, quite, quite, quite consistently, zoom out and it says, In the fullness of time, How much of a difference will it really make? It’s very much, , well, hindsight’s 2020. So we sit and wait. 

James: Thank you for that, man. Anything else to add on top of stamp duty

Bilal: No, that’s pretty much it from now. I think, again, I think it’ll stimulate buy to let investors, , that additional 125 k, , where you’re not paying that sort of, I think it’s like 3-5% , on, on second properties. It’ll stimulate that idea. So those who have money will probably do quite well in this market.

James: I was with Renee recently and he was saying, this is just an interesting little factoid. He was saying that the reason when they have many budgets that when they have changes to taxation related to housing, i e stamp duty, that they implement it straight away.

Bilal: Yes. 

James: The reason is they, generally speaking, the reason they don’t wait the new tax year is because then you get this weird period where everybody holds off 

Bilal: Yes.

James: Buying houses until they get to that point, which actually is effectively the opposite of what you’re trying to achieve, which is stimulate the housing market. 

Bilal: Yeah. So stamp duty at the moment, You’re right. So, where we talk about the tax changes, so national insurance kicks in from the 6th of November. The changes to income tax and dividend tax, that’s gonna kick in from 6th of April next year. , for stamp duty, it’s almost, I think it’s almost effective immediately. 

James: Why 6th of November for national insurance? 

Bilal: No idea. 

James: Okay. 

Bilal: Generally, no idea. Sixth of, So the payroll periods run from the sixth to the fifth. Almost like the tax share that runs from the sixth to the fifth, but on a more condensed monthly basis. So the deadline to submit is November, but really it means anything you pay in November onwards. We’ll, we will be based on the new national insurance spendings. 

James: I have a theory, it’s just popped into my head. It’s roughly two quarters into the tax year. 

Bilal: Yeah.

James: Cause it’s quarterly, isn’t it? For lots of companies. There you go. 

Bilal: Potentially 

James: There’s my theory. Who knows? Okay, cool. What are flipping brilliant, concise summary of the changes that have occurred in the mini budget and what they mean for dentists there’s one more thing we have on here. We have a little bit of bonus information and it’s about targeted business rate exemptions. Bilal, 

Bilal: It’s a pretty cool one to be fair. , now I didn’t know this until I was researching for this podcast so, and you know. Don’t come at me if I get this wrong, but I’m pretty much lifting this verbatim from HMRCs website is from April next year to 31st of March, 2035. So a big, big period, so it’s not, it’s not a two year window, is there’s a hundred percent tax relief for legible heat networks to support the decarbonization of non-domestic buildings in simple English. If you’re a dental practice looking to refit the way you consume your energy, then, and you’re going to spend some money on doing it, there’s a hundred percent actually eligible for it. So, I’ll be putting out some content with more details on that point, but I thought that was a useful tidbit of information that says, For, you know, your dental practices that operate sole traders if you operate by a limited company or neither here nor there, but whilst these tax savings are happening, you know, again, another way to stimulate, where we’re trying to go with, reducing our carbon footprint as well as creating the money there for you to do it. And then the added incentive of the tax, the tax write off to now change the way you consume energy on your sites. 

James: Awesome interest and stuff. Bilal, that was really top drawer today. There was absolutely loads of information in there. Anything you’d like to say to conclude? 

Bilal: No, as always, you know, find us at heathhillgreen on Instagram is where we spend most of our time. and if you’ve got any questions in any of this, feel free to reach out. 

James: Nice one, my man. We’ll catch up really really soon. See you later. 

Bilal: Cheer buddy.