The Dentist Magazine.

NHS pensions may be painful for dentists

Published: 3/1/2019 12:00:00 AM

Dentists could face unexpected tax bills and find their pension pot does not provide as much as they believe following government changes in NHS Pension regulations, expert advisers in the field have warned.

Financial advisers at Capstone Financial Management Ltd and specialist lawyers at Clarke Willmott LLP in Manchester have joined forces to provide help and advice on NHS pension changes and how they impact the dental profession.

Matt Rhodes, a senior financial adviser at Capstone Financial Management Ltd, said, “The combination of high incomes, complex business arrangements and ever-changing legislation means dentists need professional financial advice tailored to their unique circumstances now more than ever.

“Every budget we have a plethora of changes that impact families in the UK. For those in the medical profession, where they have an NHS Pension the impact is even greater as there are also changes to the NHS Pension Scheme coming up.”

Helen Wong, from Clarke Willmott, who specialises in advising the dental sector, said, “Often retirement for dentists also involves selling a business or finding someone to take it on. That involves legal as well as financial considerations and both need to be considered together to ensure a happy retirement.

“There also needs to be consideration for dentists selling shares in a company where there is trapped cash in the company bank account. If that cash is extracted via a dividend, dentists are hit at 40 per cent tax versus 10 per cent if we can extract that cash via a company share sale and ensure that entrepreneurs’ relief is available. With this and with the pension and exits it’s all about planning.”

In 2006 the government introduced a limit on pension saving called the lifetime allowance. This effectively places a cap on the overall value of pension assets that can be accumulated – and anyone exceeding it pays tax at 55 per cent when money is taken back as a lump sum, or at 25 per cent on top of Income Tax if money is taken as pension income. These tax charges would apply when benefits are taken.

Matt Rhodes of Capstone added, “A cause for immediate concern, are the changes to annual allowance. The government introduced a cap on how much can be paid into a UK-registered pension scheme each year.

“The annual allowance for the 2018/19 tax year is £40,000. However, this assumes that an individual has adjusted income below £150,000.

“Reform introduced in the 2016/17 tax year means that individuals with an adjusted income above this level have their annual allowance reduced by £1 for every £2 over £150,000. The maximum reduction is £30,000 meaning anyone with income of £210,000 or more will have an annual allowance of only £10,000.

Clarke Willmott LLP is a national law firm with seven offices across the country, in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton. 

For more information email Helen Wong at or call 0345 209 1090