With around one in seven (14%) UK dentists providing purely private services, and experienced private practitioners able to achieve nearly six-figure salaries, it’s a career that offers an outstanding opportunity to build your wealth today while also saving towards your future plans.

By 2021, total patient expenditure on high-street private dentistry had reached almost £5bn – eclipsing the £3.7bn spent through NHS dentists. Now, according to research from Rare Monitor released in 2024, for every one NHS-only provider there are seven private practices. Four in five (80%) UK dental providers now offers private treatment.

As a dentist you don’t have to focus solely on private patients to boost your income, however. Some 75% of dentists ply their trade in mixed NHS/private practices, and there can be significant rewards for fulfilling an NHS contract. Some consultant dentists in the public sector are able to earn more than their experienced private sector counterparts.

Despite this, the trend is towards private practice with 74% of dentists indicating they plan to reduce their future NHS work from 2024 onwards. A surge in patient interest for privately provided dental crowns (71%), implants (68%) and orthodontics (26%) is among the factors driving this trend. The UK orthodontics market alone is projected to reach $370m by 2027, having been valued at $114m in 2020.

As the market grows so does dentists’ opportunity to build their personal wealth. However, perhaps unsurprisingly given the hectic nature of managing a busy practice while treating patients in clinic six or seven days a week, principal dentists do not always have the time or energy to fully investigate the best way to manage their finances and protect their wealth.

That can leave you pondering how to reduce a hefty corporation tax bill and extract profits from your business in the most efficient manner, while also setting aside enough money to fund your future plans and retirement.

With that in mind let’s take a closer look at your options, no matter the stage of your career.

 

WHAT TO KNOW IF YOU’RE STARTING OUT OR EXPANDING

Setting up a dental practice is an exciting time but you’ll need to keep one eye on the future. In the same way that avoiding a dental exam for too long could store up trouble, if you don’t make time to closely consider the ways to finance your operation from the start the future could be filled with problems.

Questions we’re often asked include:

  • What’s the best way to finance my practice from the start?
  • What aspects of financing do I need to consider as it grows?
  • I need to invest in expensive equipment, how can I efficiently do this?

Experienced dental practitioner Dr Mahesh Patel of First Ortho shares his insights into getting his practice off the ground, at a time when orthodontics was a relatively new discipline – and widely viewed as high risk, but also high reward:

“Orthodontics was not well known at the time. That meant it was difficult to get a bank loan as there was no track-record to show them. The right financial advice was unavailable, too. To begin with three banks declined a loan.

“But I still needed to finance the property and the correct equipment, which were the biggest expenses. Luckily, I was able to secure a loan from my uncle – £70,000 plus the prevailing interest rate. I also had help from a friend who strongly recommended me to his bank.

“Of course, as the business became established costs changed. I was fortunate to build the practice with laboratory costs kept in-house. Furthermore, after a year the NHS began to make payments on completion, which wasn’t the case with private work.”

We also recommend tapping into advice about commercial and asset finance  as purchasing property and costly kit will come into play. You’ll need a plan to manage the expense of both. This could involve restructuring your business while keeping future costs in mind.

It’s never too early in your career or business plan to seek financial advice.

 

DRILL DOWN INTO THE CORRECT CORPORATE STRUCTURE

Aside from property and equipment your practice ownership model should be a continuous consideration. Often, principal dentists seek support from their accountant but in our experience this doesn’t provide them with the breadth of financial planning and tax advice that is available from a dedicated, expert wealth manager.

For example, if at least part of your income relates to an NHS dentistry agreement you will need to operate as a sole trader. This has tax implications, since sole traders are charged at their marginal rate of tax – which could be as high as 40% or 45%. It’s a case of accessing regulated financial planning to reduce the burden of income tax, by making pension contributions or contributing into a Venture Capital Trust (VCT) if suitable.

Furthermore, it’s important to review your options for cover such as life insurance and income protection. We can work with you to find the right products to suit your situation; taking into account options such as using your property portfolio as income protection so your finances remain in good shape should you need to take time away from work.

If you own or part-own the practice where you ply your trade it’s vital to have an up-to-date partnership or shareholders agreement – not least because it could contain important clauses should you leave or sell the business, or retire.

 

MAKE PRACTICE PENSIONS WORK HARDER FOR YOU

An experienced wealth management adviser will be able to help you deal with the sometimes painful problems caused by pensions complexity. In part pension planning is made tricky if you’re in the NHS pension scheme as well as contributing to a private pot.

Pensions are a superbly efficient way to take profit from your company, lowering your corporation tax burden, while building a pot for your future. You are also able to use ‘income drawdown’ from your pension savings to top up your income. But these aspects of financial management are intricate so you should always seek advice to set up such transactions.

Knowing your annual allowance figure is a great starting point: the maximum amount you can save towards your pension each year and receive tax relief. Many factors affect allowances so it’s important to seek advice to stay on top of them. For example, the UK Government has opted to abolish the lifetime allowance charge – payable on pension savings above the stated lifetime allowance – from April 2024. These types of regulatory change could greatly affect your financial planning positively or negatively.

Furthermore, most professionals we speak to are unaware that a pension scheme can also be a vehicle for business expansion. With the right advice and approach your pension pot can make a loanback to a limited company helping you to finance an extension to your existing premises – or even build a completely new practice, for example.

 

LOOK AFTER YOUR FINANCES WHEN IT’S TIME TO GO

Worrying about paying yourself while funding your practice today is one thing; thinking about the future is an additional burden.

The 2018 McCloud judgement, which identified unlawful age discrimination in public sector pensions including the NHS, has affected many medical professionals. It’s just one example of an eventually positive outcome requiring careful consideration from individuals because it has changed the pensions landscape and affected retirement decisions.

And retirement is only one consideration when it’s time for you to shut the door on the dental surgery. You may have a succession plan in mind, ensuring you pass on the business as you prefer. At this point you won’t want to leave your legacy to chance. Having built up your wealth over decades, a wealth manager can take you through the process of estate planning to ensure assets including savings, investment and property are efficiently handed down from an inheritance tax point of view.

Perhaps, though, it’s simply time to sell your business after you’ve achieved your initial goals and enjoyed notable growth. Dental practice groups are now becoming more prevalent in the UK landscape. It’s little wonder private practices are catching the eye of investors: profit generated exceeds the NHS figures by around £16,000. This is clearly an option worth considering if exit is on your mind. According to Rare Monitor, more than a fifth (21%) of the private dentistry market is currently owned by just five providers.

Whatever stage you’re at – setting up your business, considering profit extraction, or exploring retirement or exit options, ask us for a free consultation. After all, making the most of your hard-earned wealth shouldn’t feel like pulling teeth.

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