As a dental practice owner, you’re juggling patient care, staff management, compliance requirements, and business growth – all whilst trying to keep your finances healthy. But here’s something that might make you sit up in your dentist’s chair: many UK dental practices are unknowingly overpaying tax by thousands of pounds each year simply because they’re missing out on legitimate tax reliefs.
Let’s explore the main pain points causing dentists to miss out on dental practice tax reliefs. Find out how to claim what’s rightfully yours.
Why Dental Practices Overpay Tax: The Core Problems
The Complexity of Dental-Specific Tax Rules
The tax landscape for dental practices isn’t straightforward. Whether you’re running an NHS practice, a private clinic, or a mixed operation, each has unique compliance requirements and tax implications. Many general accountants simply don’t understand the nuances of practice finances and dental practice tax reliefs, leading to missed opportunities for relief.
The problem compounds when you consider that dental practices often operate as limited companies, partnerships, or sole traders – each with different tax treatment. It’s easy to miss sector-specific reliefs that could significantly reduce your tax burden when you don’t have specialist tax knowledge.
Time Poverty: Too Busy for Tax Planning
Let’s be honest – when you’re managing patient appointments, dealing with CQC regulations, and handling staff issues, tax planning falls to the bottom of the priority list. Many dental practice owners find themselves overwhelmed by the administrative side of running their business, trying to manage everything themselves without proper support.
This time-poverty means you’re likely focused on crisis management rather than strategic tax planning. By the time year-end arrives, it’s often too late to implement tax-efficient strategies that could have saved you money.
Outdated or Generic Accounting Advice
Perhaps you’re working with an accountant who handles various types of businesses but lacks specific dental sector expertise. Without understanding the intricacies of dental practice operations – from laboratory costs to equipment depreciation to associate arrangements – even well-meaning accountants can miss valuable relief opportunities.
Common Dental Practice Tax Reliefs That Get Missed
Capital Allowances on Equipment and Practice Improvements
Dental practices invest heavily in equipment – from digital x-ray systems to CAD/CAM technology and patient chairs. These investments qualify for significant tax relief through capital allowances, yet many practices fail to claim the full amount available.
The Annual Investment Allowance (AIA) currently allows you to claim 100% tax relief on qualifying equipment purchases up to £1 million [1]. For a practice paying corporation tax at 25%[2], that’s potentially £250,000 in tax savings on a million pounds of equipment investment.
But here’s where practices go wrong: they either don’t claim at all, claim too little, or fail to distinguish between equipment that qualifies for different rates of relief. For example, integral features of your practice building (like heating, air conditioning, and electrical systems) qualify for relief, but at different rates than moveable equipment[3].
Research and Development (R&D) Tax Credits
You might think R&D tax credits only apply to pharmaceutical companies or tech startups, but dental practices undertaking innovative treatment approaches or developing new clinical techniques may qualify. If you’re trialling new procedures or working to solve technical uncertainties in treatment delivery, you could be eligible for R&D tax relief.
Many dental practices miss this entirely because they don’t recognise their innovative work as “research and development.” The relief can be substantial – the merged R&D scheme (combining the previous RDEC and SME schemes from April 2024) offers relief at 20% above the standard corporation tax deduction [4].
Training and Development Expenses
Continuous professional development is essential in dentistry, but many practices fail to claim the full tax relief available on training costs. If you’re funding courses for yourself, sending associates for specialist training, or upskilling your dental nurses, make sure you claim these expenses and reduce your tax bill.
The key is proper documentation and understanding which training expenses qualify. Training that enhances existing skills relevant to your current business activities is generally tax-deductible [5], whilst training for entirely new business activities may not qualify.
Pension Contributions for Tax Efficiency
Strategic pension planning offers one of the most powerful tax-efficient ways to extract profits from your dental practice. Yet many practice owners either contribute too little to pensions or miss the opportunity to use employer pension contributions strategically.
For instance, employer pension contributions paid through your limited company are tax-deductible business expenses, reducing your corporation tax whilst building your retirement fund. The annual allowance is currently £60,000 [6] (subject to tapering for high earners with adjusted income over £260,000 [7]), meaning you could be saving 25% corporation tax plus avoiding income tax and National Insurance on dividend distributions.
How to Stop Missing Out Practical Solutions
Work with Specialist Dental Accountants
The single most effective step is partnering with accountants who specialise in dental practices and understand your sector’s unique challenges. Specialist advisors know which questions to ask, which dental practice tax reliefs to look for, and how to structure your affairs tax-efficiently from the outset.
If you’re currently working with a general accountant, it might be worth having a conversation with a dental specialist to see what opportunities you’re missing. At AssureTax, we focus specifically on dental and healthcare practices, so we’re familiar with the tax planning strategies that work best for your sector.
Implement Proactive Tax Planning
Rather than reactive year-end accounting, shift to proactive tax planning throughout the year. This means:
- Regular reviews of your financial position (at least quarterly)
- Forward-planning for major equipment purchases to optimise capital allowances
- Structuring associate and staff arrangements tax-efficiently
- Planning dividend and salary strategies to minimise overall tax burden
Monthly management accounts with analysis and commentary help you understand your practice’s financial performance in real-time, allowing you to make tax-efficient decisions before it’s too late.
Stay Informed About Tax Changes
Tax legislation changes regularly, affecting the tax reliefs available to dental practices. Having an advisor who keeps you informed about relevant tax changes and how they affect your practice ensures you’re always taking advantage of new reliefs whilst remaining compliant with new obligations.
The Cost of Doing Nothing
Let’s put this in perspective with a realistic example. A typical private dental practice with £500,000 turnover might be missing out on:
- £15,000-£25,000 in unclaimed capital allowances on equipment and practice improvements
- £5,000-£10,000 in training and development relief
- £10,000-£20,000 through inefficient salary/dividend strategies
- £5,000-£15,000 through suboptimal pension planning
That’s potentially £35,000-£70,000 in unnecessary tax payments each year. Over five years, you could be looking at £175,000-£350,000 that could have stayed in your practice or personal wealth instead of going to HMRC.
Optimising Your Dental Practice Tax Reliefs
If you’re concerned that your dental practice might be missing out on legitimate tax reliefs, you’re not alone. The good news is that it’s never too late to start optimising your dental practice tax reliefs.
Consider booking a free dental practice financial health check with our team. We’ll review your current situation, identify potential areas where you might be overpaying tax, and show you what proper dental-specialist support could save you. There’s no obligation – just clarity on whether you’re getting the best tax outcomes possible.
Alternatively, if you’d prefer to explore specific concerns, feel free to email us with your questions. We’re always happy to have a conversation about how dental practices can become more tax-efficient.
Remember: every pound you save in unnecessary tax is a pound that can be reinvested in your practice, paid towards your pension, or used to improve your work-life balance. Don’t let another year go by leaving money on the table.
About the Author
Jayen Patel is a Chartered Certified Accountant and founder of AssureTax Accountants, specialising in dental and healthcare practice finances. With over two decades of finance experience, Jayen helps dental practice owners reduce their tax burden, improve profitability, and build sustainable businesses that support their professional and personal goals.
Frequently Asked Questions
What dental practice tax relief can I claim?
As a dental practice owner, you can claim relief on equipment purchases through capital allowances, training and CPD costs, pension contributions, practice running costs, and potentially R&D tax credits if you’re developing innovative treatment approaches. The specific reliefs available depend on your practice structure (limited company, partnership, or sole trader) and how you operate.
How can dental practices reduce their tax bill?
Dental practices can reduce their tax bill through strategic use of capital allowances on equipment, optimising salary and dividend strategies, maximising pension contributions, claiming all eligible business expenses, and working with specialist dental accountants who understand sector-specific reliefs. Proactive planning throughout the year, rather than reactive year-end accounting, typically yields the best results.
Are dentist expenses tax-deductible?
Many dental practice expenses are tax-deductible, including clinical equipment, laboratory costs, staff salaries, professional indemnity insurance, professional subscriptions, training costs, and practice running costs. However, the way you claim dental practice tax reliefs depends on whether the expense is capital (like equipment) or revenue (like consumables), and on your business structure.
What capital allowances can dental practices claim?
Dental practices can claim capital allowances on equipment purchases (x-ray systems, patient chairs, computers), practice improvements (air conditioning, electrical systems), and vehicles used for business purposes. The Annual Investment Allowance currently allows 100% relief on qualifying assets up to £1 million, providing immediate tax savings.
Do I need a specialist accountant for my dental practice?
Whilst not legally required, a specialist dental accountant typically saves practices far more in tax than they cost in fees. They understand dental practice tax reliefs, optimal practice structures, associate arrangements, and NHS/private income tax treatment that general accountants might miss, often identifying tens of thousands in additional tax savings. For a free, no-obligation chat, call us on 0208 666 0223 or complete our contact form.
Can dental practices claim R&D tax relief?
Yes, dental practices undertaking innovative treatment approaches, developing new clinical procedures, or solving technical uncertainties may qualify for R&D dental practice tax reliefs. This isn’t just for laboratories – if you’re advancing dental techniques or finding better solutions to clinical challenges, you might be eligible for substantial tax credits.
How much tax should a dental practice pay?
There’s no single answer as it depends on your practice structure, turnover, expenses, and how tax-efficiently you operate. However, if you’re paying more than 19-25% of your profits in corporation tax (for limited companies) or 20-45% in income tax (for sole traders/partnerships) without considering all available reliefs and allowances, you’re likely paying more than necessary. A specialist review can identify whether your tax position is optimal.
References
- GOV.UK (2025). “Annual Investment Allowance.” https://www.gov.uk/capital-allowances/annual-investment-allowance
- GOV.UK (2025). “Corporation Tax rates and reliefs.” https://www.gov.uk/corporation-tax-rates
- GOV.UK (2025). “Claiming capital allowances” https://www.gov.uk/capital-allowances/what-you-can-claim-on
- GOV.UK (2024). “Research and Development (R&D) tax reliefs.” https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief
- HMRC (2025). “Business Income Manual BIM42551 – Specific deductions: training expenditure.” https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim42551
- GOV.UK (2025). “Tax on your private pension contributions.” https://www.gov.uk/tax-on-your-private-pension/annual-allowance
- GOV.UK (2025). “Tapered annual allowance.” https://www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance
