By DAN FINE, sales manager at Hive Business
The bit in the summer budget saying the dividend tax rate you’d been enjoying (if you’re in a limited company) is going up five per cent has pushed a group of dentists that may have previously been on the fence with tax planning firmly towards it.
The draw is clear, with average savings for practice owners of £50k p.a., plus the recent option to insure the downsides… it is a robust method of fighting that five per cent hit.
However, this is really only half the story. Sure, the saving is great, but it is important to not fall into the trap of seeing that as an end in itself. Try and see the saving as an opportunity, a bridge to allow you to maximise your wealth.
What does that mean?
Even though this cash may feel like winnings, a bonus you would not have received had you not done the tax planning, you don’t have to treat it like throwaway cash. Of course you are £50k better off, and you could go out and get three new suits on Savile Row and then go for lunch at Le Manoir while booking your holiday to Monaco.
There are some people who would be happy to keep it in their savings account generating a steady but meagre return. Holding onto the cash isn’t the worst thing you can do, but you’ve just saved £50k – why not set it aside and look to use it to truly maximise your position? Would it be better if you put it into a buy-to-let property? Possibly, even with the extra taxes Mr Osborne has imposed.
You could invest it in your business, most obviously things like refurbishing the surgeries, building a new website, putting up signage, all things with a fairly high return on investment by any standards. There are also all sorts of more nuanced marketing activities you could initiate such as sales training for your staff as part of creating a robust sales process, and perhaps looking at new sales channels.
The point being that, if you want it to be, this could actually be a lot bigger than grabbing a bit of extra cash. Try looking at it another way: this is the start of a project to make your business better at making money, to buy you that bit of breathing space you’ve always wished you had. We’re talking about improving the place where you spend all of your time, making it more efficient in the long term, and so it’s a project that will make your life easier. You’ll either have more time on your hands, or more money, or both. And from where you’re standing right now, it’s free!
If you would like to discuss how integrating tax planning with marketing can transform your business and your life, call Dan on 01872 300 232 or email firstname.lastname@example.org.
Hive Business delivers accountancy, marketing, business development and wealth strategies for UK dentists and healthcare professionals. For more information visit http://hivebusiness.co.uk