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Dentists Who Invest Podcast
Official Podcast of the Dentists Who Invest platform. Talking all things investing, money and finance with a dental spin. Have you ever wondered how you can grow your wealth and protect your hard earned money as a Dentist? We've got you covered. Featuring famous guests such as Andrew Craig, Edward Zuckerberg and Benyamin Ahmed we delve deep into EVERY aspect of finance to educate and empower ALL Dentists.
Dentists Who Invest Podcast
Dental Practice Market Outlook Nov 2025 with Luke Moore [CPD Available]
Collect unlimited free verifiable CPD for UK Dentists here >>> https://www.dentistswhoinvest.com/videos/dental-practice-market-outlook-nov-2026-with-luke-moore
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Valuations are shifting fast, and so are the rules that shape them. We sat down with dental practice sales expert Luke Moore to map the real market moves behind the headlines: why groups are winning a bigger share of deals, how cheaper debt is fuelling micro-consolidation, and where independent buyers are still paying up for the right assets. If you’re weighing a purchase, planning to sell, or just want to understand what your practice is worth in today’s climate, this conversation lays out the numbers and the nuance.
We dig into the latest data points on deal sizes and EBITDA multiples, separating independent buys from group-led transactions and explaining why some NHS-heavy portfolios are dragging averages down while high-quality private and mixed practices still push toward the high-7x range. Geography and recruitment take centre stage: NHS valuations diverge sharply by region, with London and the South East often outperforming due to easier clinician hiring. We also unpack the thaw in Wales, where signals of a return to an item-of-service style approach and an uplifted hourly rate are drawing buyers back—alongside a sober look at how associate pay expectations could compress EBITDA.
Policy is the wildcard. A widely flagged income tax rise could make holding less attractive than selling for many principals, especially as frozen tax bands and the 100k trap quietly raise effective rates. We walk through BADR’s step up toward 18% by 2026 and what that means in pure cash terms, plus the practical timing options many owners are modelling to protect their net proceeds. On costs, a likely National Living Wage increase around 4% will ripple through pay differentials, nudging ancillary costs higher and forcing tighter discipline on margins.
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Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
What's up guys, another podcast with the expert on dental practice sales, Mr. Luke Moore. We're here today to talk market speculation, especially with the changes that are upcoming that most dentists need to know about and also give a little bit of insight on what what might happen with Rachel Reeves' budget in a few weeks. Looking forward to this episode. I'm also happy to share that there is free verifiable CPD associated with this podcast episode. Whenever you finish the episode, all you have to do is click the link in the podcast description. It'll take you right through the Dentists Who Invest website. You'll be able to complete a short questionnaire, and once passed, you fill in your reflections, and we'll go ahead and email over to you your verifiable CPD certificate, which is entirely free. What that means is this podcast episode will be able to contribute towards your verifiable CPD hours during this learning cycle. Okay, Luke, let's talk about all the things that I mentioned in the intro just there, because these are going to be top of mind for a lot of dentists, especially the principals out there and extra especially the principals who are thinking about selling in the near future. I guess the biggest thing to talk about that's top of mind for a lot of people is the changes in BADR, which are coming around on the 6th of April, I believe, 2026.
Luke:Yeah, no, absolutely. No, I will talk about BADR. So yeah, obviously it's been a little while since we caught up, James. So I thought it was useful just to kind of cover a few of the broad-based subjects as to what um has has changed. Because as with Dental Pratt Sales, there's always something that's moving. So um I'm gonna touch a little bit on the Welsh NHS dental contract reform, um, which we've had a little bit of an announcement since we last spoke. Um obviously we're gonna look ahead a little bit to what's might happen on the 26th of November, um, which is only, as you say, probably a week or so away from us now. Um, and there's been lots of kite flying as to what may or may not change in that budget. Um, and then also normally ahead of the budget, we get an update on what they're gonna do in national living wage, so what the impact on that will have on wage inflation on dental practices, and then we're also gonna talk a little bit about um we released our interim um goodwill report um in January, um, which talks about all the transactions that we've acted on up until the end of September. Um, and uh that's already written. So I can also give you a little bit of an insight, um, a bit of a preview if you like, as to what's gonna be in that report and what the uh the key um outcomes are, which are actually quite interesting because there has been a bit of a shift. So um I guess it probably makes sense to kind of start with that as I kind of trailed that last. So I guess the big shift that is quite interesting is for the it is we've seen a massive leap um in terms of corporate consolidation or micro consolidation in comparison to the last two reports. Um so when we released the annual Good Rule report back at the um back in the middle of May, which ran to the end of March, um independents were buying about 70% of practice, I think it was about 69%. Whereas in this report, actually, now we're selling a lot more practice to groups um and to um some of the bigger corporates. So independent transactions have dropped down to 62% um of overall transaction level. Now, I think that's twofold. The first one is to caveat slightly that this is the interim report, so it only covers six months worth of data as opposed to 12 months' worth of data. So sometimes in a smaller data pool, you will have slightly bit, slightly bigger swings, which then level out a bit when you do the 12-month report. But I think the more interesting thing that kind of covers this is twofold. So the first is you is I think there genuinely are more groups out there. So we class a group is anyone who's got three or more practices. And I think over the last few years, you've seen lots of people buy one, two, and then come back for their third or fourth practice. So at the moment, there's about 600 institutions that on average own three or more practices across the dental sector, and that number is is growing. Um so that's the first thing. So we're talking about a wider base to start with. The second thing is I think is access to funds. Um and what's been really interesting over the um sort of the last few months is how some of the banks are in manoeuvring their attitude to the dental space. Um, so what we have particularly is you have Nat West who've changed their dental policy now. So they don't they used to have a cap on unsecured lending and they've now released that. So they don't have a cap on unsecured lending. Now, at as at the time we speak, they're still not doing that much in dental because they haven't quite got their pricing right. But the key thing is that actually they are now in the market to lend to people who want to buy multiple dental practices, and that's creating more competition in that space. So, what we've actually seen is in terms of interest rates, is we've seen a slight drop in the interest rate margin that some of the banks, uh some of the lenders are charging, and that's fueled some of the growth of some of these microconsolidators because overall they can get slightly cheaper debt. Um, and of course, if we cover kind of the macroeconomic situation, a lot of people are perceiving that interest rates will probably continue to fall. In fact, it's touted. Um, I think they're now saying it's pretty much odds-on that we will have an interest rate reduction in December down to probably like a quarter of a quarter of a percent down to 3.75%, um, to give the economy a bit of a kickstart. So overall, we're gonna have slightly cheaper debt, and that's fueling that corporate and that micro consolidation market. So if I was to crystal ball it, I would say that when we do the April report is that we probably will continue to see that percentage hovering around 62 to 64%, which from a percentile's perspective is quite a big jump um from where it was over the last two or three years, which has kind of been a bit sticky uh at that 70% marker for independent sales.
Dr James:Excellent. Well, I mean, that's interesting, and I actually think that what you said kind of marries up what I've seen anecdotally as well. People, especially the kids, if it was to make a bit of a generalization there, are a lot more ambitious in that they want to have the empire, they want to have the multiple practices, and maybe it's not so much of a thing just to get the dental practice, uh, have one, make it your own, and then just be that that be something that you continue to uh, you know, you you just work in it for uh forever indefinitely until you retire. People are thinking the kids these days they're a lot more ambitious, I think. And I don't know why that is. I have no idea.
Luke:I would wholeheartedly agree with that. I mean, obviously, I the time I've been in dental practice sales is that people used to buy what inverted commerce their practice, and it was their practice because they wanted to work in it full-time. Whereas now I think the attitude of a lot of the sort of newer dentists or younger dentists um is that they don't necessarily want to do dentistry, they want to be business owners, so they come out and they buy a practice, and then within 18 months to two years, they're back for practice number two and practice number three. And most people, by the time they've got to their third or fourth practice, are down to doing one or two clinical days, they're not full-time dentists anymore.
Dr James:You know, can I make a brief comment on that? I actually think it's part of a wider shift in perspective that entrepreneurship is something that's now seen as much more mainstream and almost like cool. And that there's actually a wider commentary there from the point of view of the influencers that we see out there. I don't know if you've heard of Alex Ramosy and Gary Vee and people like that. I think they've popularized it, and I think we're now seeing that seep into dentistry. That's my theory on that one.
Luke:Yeah, I think I was listening to a podcast yesterday, and I think the you know, certainly attitudes to um entrepreneurialism in the UK, you know, used to be we were we were all quite pessimistic, you know, we always saw the downside, not the upside. Whereas, you know, in in America it was always like they took the upside, didn't see the downside, and actually some of those attitudes have now come across the pond a lot more, and you are seeing now that actually, you know, people in the UK are prepared to take more risks than habitually they were 10 to 15 years ago.
Dr James:100% a bit of a cultural shift going on. You know, just a quick anecdotal story on that one as well. I met this young gentleman the other day, and he was 19 and he was a dental student. Okay, he has a social media agency that top lines 40,000 pounds a month. This kid is 19 on his summer internship, on his summer internship, as in when he's not at dental school, he is offering his ser he's working for free as an interim in a dental software company. And I'm like, man, when I was 19, I was going to like Vietnam and stuff like that. You know what I mean? You know, that's what I was doing. We I was going on my gap year and whatever, and it just stuns me now. The the the you know, to in a in a nice way, the very young people who it's they seem to be so much more switched on than even my generation, and I'm not terribly old, I'm 34, you know what I mean. So, yeah, anyway, we're going on a tangent, but just sharing that out of interest because part of this podcast is getting people to understand and see what else is out there, and that blew my mind. That is that is a real life person. I came across them the other day, and I was I was blown away. Anyway, back to the subject matter at hand. I've been distracting everybody.
Luke:No, that's cool, that's fine. Um, so yeah, and I guess what we've also seen is a bit of a shift in pricing. Um, so uh the average deal that we've done has gone up from the on the group overall, it's gone up from 1.27 million to 1.48 million. But just in the independent space, so that's people who are buying their first or second dental practice, the average deal value was 794,000. Now it's gone up to 879 and a half thousand. So it's near enough 100 grand jump, um, probably in the region about 13 to 14 percent pricing jump um to buy a practice in comparison to what it was last year if you're an independent owner. Um now again, I place slightly less weight on these stats because of course this is always based on the practices we're selling, and because again, the data pool's smaller and you know, in in give or take, this thing is it's about 60 to 70 transactions within the pool. Um so you know, there will be this will probably level out in the overall report. But I do think it shows an overall shift, not that prices are necessarily going up in multiple um perspectives, but that the but what we are seeing is we are seeing a slightly more heated market. Um, with words you said going back to what we just said a few minutes ago, where you've got more people coming into the space and certainly the popular practices, which in for the independent space is still NHS and mixed practices, less so private practices, is you'll get in that heat of competition again, you know, which arguably we haven't seen since the very back end of COVID.
Dr James:Amazing, awesome. That's cool. I'm I'm I'm loving these insights by the way. So yeah, uh yeah, eager to hear more. UK dentists, if you are just starting out on your investment journey or you're already investing and want to know if your strategy is 100% foolproof and optimized to reduce fees and maximize growth, then you might like to know. I have teamed up with independent financial planner Luke Hurley to create the Dentist Who Invest Academy. Dentist Who Invest Academy fully documents the process that a financial planner would normally perform for a client behind the scenes and reveals it to you. This means that you can implement it into your own life, therefore pulling your financial freedom date forward by years. If you wish to set up and manage your own investment portfolio, then this is designed to give you all the tools and knowledge you need to perform this properly. This means that when viable and appropriate, you will have the know-how and skill required to build and manage your own investment portfolio, plus ensure that it is 100% optimized. If this sounds like your thing, then keep an eye out on the Dennis who invest mailing list where we'll be announcing the details of the next intake very soon.
Luke:Um, so yeah, so that's the first thing. So now to be fair, what it's caveating what I just said is that there is a slight increase in multiple. So from the independence basis, you were the average multiple last year was 3.3 times or 3.31 times, and now we're up at 3.52 times, so which is a 0.25 times jump, give or take, um, in the average cost of a practice, which doesn't sound massive, but actually when you consider if you're buying the typical person is buying a practice, you know, of say 800 grand, 0.25 times, you know, can be the best part of 50 to 60,000 more for the same asset than what you would have bought before. Um, so you know, there are these kind of jumps in fuel fuels in competition. And I think part of that is because debt is slightly cheaper, so more people now are starting to latch onto that. And also to be that, I you know, not to blow smoke up your um your backside, James, but I do think there is more education out there now. So people are more in tune to what they want to buy and they're buying the right assets. So certainly what I think we're finding is that when people are coming to us, whereas we used to get really naive people who used to didn't know what a bit dar was or didn't know what fair maintainable trade was, what we find now is people come to us and they're armed and they're more precise in terms of exactly what they want and they've done a bit more diligence, which means when you get a good asset come to market, you do get that heat of competition.
Dr James:Wow. Well, hopefully, Dennis who invest has had some part to play in that and very uh humbled if it has. And you know what? Uh what can I say? These are the sorts of things that empower people, and I think once upon a time people were scared to talk about money like it was an it was a naughty thing or it was slightly to boo. Whereas now people are realizing they're like, actually, I need to know this stuff if I want to make the business work and enjoy my life and kind of see things the other way around. Maybe that's a generational thing as well. And yeah, hopefully Dennis invested some part to play in that because as I say, that is very much the philosophy and the reason that I started it way back in the day. So there we are.
Luke:So, yeah, so the and I guess the other point is now moving on to sort of slightly some of the bigger practices. So these are the ones that sell to people you've already got sort of anywhere between sort of three practices upwards. So the average multiple in this in this report is going to be around 6.9 times, which is a slight fall. So we're now in sort of the sub-7 territory. Um, which if you're a bigger practice owner, you might be like, oh no, that means the value's falling. This this is this is horrendous. But but actually, in the grand scheme of things, if you get underneath the covers of that, A is a slightly bigger data pool, as I said before, because more practices are now falling into this category. Um, but also I think it's reflective of the fact that there's been an adoption, particularly for some of the NHS practices, where they realize that probably reform isn't coming down the line, um, as in NHS contract reform, not reform the political party. Um, but it isn't coming down the line. And so actually now they've got to have this acceptance that they've got a bigger NHS practice, there's not going to be this golden event that's going to make it all rosy and multiples are going to go up. And so we started to see more people accept the market as it is because they don't want to hang on forever, you know, waiting for you know a sort of a golden goose to come through. And so we started to see more NHS practices move within those markets. Um, and that in finished has brought the overall multiple um for group sales down. Whereas if you look at you know our top 10 deals by price, um, is that you know their multiples are still up, sort of pushing eight times. I think 7.92. So again, for really strong, you know, in it in and in this level, it's almost the other way. It tends to be more private and mixed as opposed to NHS, but for really strong private practices, you know, where they, you know, you've got sort of five, six surgeries, you've got really decent revenue, decent EBITDA margin, you know, the market is now almost now going the other way and it's pushing back towards the higher sevens for those kind of assets.
Dr James:Interesting. Interesting. And can I just ask a quick I know we're talking about groups, but let's just say, I know that this probably never happens. You never, it's I mean, in your experience, have you ever come across a group where the majority of practice or virtually all the practices in the group are NHS practices? Let's say 80% of their turnover is NHS. Does that happen?
Luke:Yeah, there are a few groups in around the London areas where that's exactly what they want to acquire.
Dr James:Okay, interesting.
Luke:Because for some people, I think the NHS assets work really well. Um, because actually they can take the view that you know they're not quite so clinician dependent. And in the areas where it's easier to recruit, i.e. London and the South East, some people prefer having those NHS assets because arguably they don't require, you know, and I might get shot for saying this the same level of um people management that they require um that for a for a private practice where you're so contingent on your your highest gracing private associate.
Dr James:Wow, I was just um okay. Yeah, well I guess that makes sense now that you said I lied, you know, because there are a lot more dentists in those areas, so recruitment is less of an issue. And I was, I guess where I was going with that was uh would you in that instance that we talked about just then, uh I know that you said the multiple was slightly lower for NHS practices uh and what have you, so you reckon maybe 6.9 or 6.8 is something accurate for those practices as well, those sorts of groups?
Luke:Uh well this is an average of all practices of 6.9, so that's gonna be bumped up by the private mixed practices that do really well. So probably NHS practices, the average multiple is actually around 6.39.
Dr James:Oh, good to know. No, I was just interested, that literally just popped into my head there whenever you were talking.
Luke:Yeah. Um but but to be fair, within that 6.39, there's really big geographical dispersity. So if you're gonna put a practice in for arguments, say the South West Peninsula, you know, you're probably in the region of five to five and a half times. If you put the same practice in the London patch, you're gonna pay a lot more for it. Um, I guess that's the difference, is NHS is really geographically sensitive, private and mixed practices less so if anything, sometimes it goes the other way.
Dr James:But yeah, sorry, and all I was gonna say is now that you say it out lied, that makes complete sense. And I'm gonna say that recruitment factor is probably one of the main drivers there.
Luke:Yeah, which I suppose probably dovetails nice to segue into what I said about Welsh contract reform because of course the Welsh market has been really, you know, it's you know, to be honest, it's almost been static. Nothing's really been moving in well for quite some time. Um, because everyone's been really nervous of the pilot contract that they were running. Because whilst it was really profitable, everyone knew it wasn't going to be forever. Um, so there was a real um, if you like, uh concern that as you could buy these practices and what you were buying, you wouldn't get in the longer term. Equally, to the because they were so profitable, well, the run of the reasons they were so profitable is that actually you didn't require a lot of dentists to deliver those kind of contracts. So if the contract was to change where you needed more dentists, all of a sudden you couldn't have a practice, not only would it be less profitable, but also considerably understaffed. Um, so the Welsh market's bit and you know has really struggled over the last few years, particularly on the mix and NHS side. Whereas now we've had some kind of announcement about um dental contract reform, and it's not, I should add it's not a full announcement, so we still don't really know um exactly how the contract's gonna work. They haven't dotted the i's and crosses of the T's. What we do know is it's almost going to go back to being some kind of like feed per item style system where you'll have like a list of items, you know, which will be at a set NHS price. Um obviously they've boosted the hourly rate from 135 to 150 pounds an hour. So the the headline, if you like, is that dentists are gonna be paid slightly more than they have been, whether that's the reality when it comes to the full detail, of course, will remain remains to be seen. But I guess what's interesting is from the market perspective is that we've now seen some of the groups now say, oh, okay, we're comfortable with this actually. We think we know how we can make it work. Um, and actually, in terms, you know, we're back considering practices in Wales. Now, I guess from a valuable perspective, what I'm struggling with a little bit is that how we model that from an associateship perspective, because I don't think it's come to any great surprise to anyone that most NHS associates aren't paid 50% of the UDA rate, is they're paid a set UDA rate, which often can be as low as 30 to 35%, depending on what the income incumbent UDA rate is in the practice. Whereas if you've got a set price list in Wales and you've got an area where recruitment is tricky, is that actually are we going to go back to a system where NHS dentists in Wales, the X the expected um outcome is 50% of gross fees, in which case actually it may all be that the EBITDA on these practices is going to drop because there isn't the same contribution rate on the NHS as there has been historically? Um and in turn, then what you've got is a lot of what have been quite profitable NHS practices, now their value is going to fall slightly because they're not going to be able to maintain the same level of profitability because clinicians are going to be more expensive proportionally to what's been delivered.
Dr James:That makes complete sense. So even though associates might be getting paid for and paid paid more, does will that actually trickle through to the principals? Is is is in effect what we're saying. And uh I guess it remains to be seen on that one.
Luke:Yeah, so um, but we are seeing people starting to make moves in the Welsh market now, um, which I think is a good thing because I think a lot of Welsh principals, you know, although their value in inverted commerce might have been high, it was a value that wasn't realisable. At least well, now they've got an asset that you know perceivably will be realisable and they can make decisions what they want to do. And of course, there was a bit of a headline grabber to start with that they were going to use this dental access portal, and actually patients wouldn't belong to the practice. They they've quite simple they've got rid of that, you know, that there was a bit of kickback on that. So now the goodwill will belong to the practice. Um, but it's um at at what level, I guess, is what remains to be seen.
Dr James:Interesting. Okay, watch this space then, really, I guess all we can say.
Luke:Yeah, so that's that. Um, and then yeah, and I guess obviously we did say that we'd obviously look ahead a bit as well to the budget next um or next week, it might be this week, depending when we release this podcast. But the I guess the the thing is there's been lots and lots of kite flying. Um, it's probably one of the longest run-ups to a budget we've seen, and there's been lots of ideas kind of out there and out there in the press about what may or may not happen. Now, I guess what we probably are reasonably certain of now is that there's going to be some kind of rise in income tax. Um it's touted it will probably be around two pence in the pound. Um, and what we don't know yet is that whether some of that will be offset for lower earners by a reduction in national insurance. Now, what that means in simple terms is that if you act us as a limited company, um the chances are you will pay more tax because you pay income tax on dividends. Um, so that will probably go up. Um, and likewise, if you're a sole trader as a dentist, you will almost certainly be probably more um than the quoted, I think it's 40,270 or 45,270, which they deem as to be a working person. So your income tax in the round will probably go up and you might not get the national insurance offset to offset that. Um so I guess what that means from a practice valuation perspective um is what we might see is depending on what they do with capital gains tax, there might have been people who said, actually, do you know what there's this period where you know actually does it make sense to sell because I you know I can earn that in a period of time. It's all of a sudden people are paying a lot more in income tax. What we don't know is that whether we will see more people come to market through two for two reasons. Number one is that actually the disparity between what they earn if they sold the practice against what they earn if they retain the practice, that gap may widen because they're gonna buy more income tax and earnings. So you may have more people to throw the towel in. Um, and also, of course, this is off the back of a budget last year where they weren't going to raise tax. This tax is this year, and now we're back arguably with a bigger raise of tax this year than what we had last year. And if they don't catch capital gains tax, which is one of the few taxes that hasn't been kite flown, um, that doesn't mean to say they won't be in the budget, but as it stands at the moment, there's been no kite flying around capital gains tax apart from on death, um, then actually it may well be we see more people come to market, and that creates an area where there's more assets for sale. Um, so I guess that's the first thing. The other thing which we already know, but and again, this assumes there is no further change to this in the budget next week, is that we have already got an increase that's on the slate in business asset disposal relief coming at the beginning of April next year. So at the moment, on the first million pound sold or first million pound gained, um, you were paying 10%. Then they changed that to 14% um as of the beginning of April um 2025. And then as of the beginning of April 2026, that will go to 18%, which is another 40 grand in cash terms on that million pound asset. Now, that could change again. We don't know if it will, but as it stands at the moment, it's probably certainly not going to go down. Um, but it may well be that you know we've got that coming down the line already from a CGT perspective, and we're already starting to see people get a bit apprehensive of making sure that they've completed their sale by the end of this financial year so they don't lose out on that 40 grand, or of course it might be 80 grand if you're husband and wife.
Dr James:Interesting. And look, you might know this, uh you might know this stat uh off the top of your head. I heard something the other day, and it was something along the lines off that no government has touched income tax in terms of increasing the percentages, increasing the proportion of income tax for thinking is it 20 years now, something like that?
Luke:Yeah, it's a long time. I again I've read the same stat and I comment on my head, but it certainly is in the region of 20 to 20, 25 years. Um and yeah, obviously what we have had is we have had various different meddling over the years and with the highest rate of income tax. At one stage it was 50%, um, then it was brought down to 45%. Um and what we don't what I guess we don't know is the whether there's going to be changes in that that that tiering system. Now, I guess the biggest thing which a lot of people are talking about at the moment is actually the people which a lot of associate dentists may fall into this trap of what they call the income tax trap, um, where anyone who earns more than 100 grand a year, actually the effective rate of tax goes up to near enough 64%. Um and it's actually more than that if you're a parent, um, because over 100, if you earn more than if sorry, if you have a single person in a household who earns more than 100 grand a year, um, not only do you start to lose your personal allowance, which means you're paying more tax proportionally, but also um you lose all of your childcare credits. So at the moment, what you can do is that if you earn sub 100 grand a year, you can put uh money into an account and the government for every 80 pence you put in, the government give you 20 pence, which you can then use to pay your nursery or child binder. Um you lose that 100 grand a year. And also, and now it stands that if you uh if you earn sub 100 grand a year, but you get 30 hours of free childcare on a turntime basis. So for 38 weeks a year, you get 30 hours a week of childcare. Um, the moment you uh go over the 100 grand threshold, you lose all of that and you'll reduce down to just 15 hours when your child turns free or the term after your child's third birthday. Whereas if you're a sub 100 grand earner, it's when the child is after their nine-month birthday.
Dr James:Yeah, there you go. And that's why a lot of people who are in that threshold, they like to retain their profits in a limited company, or it can make sense for them. If they're not limited to trading as sole trader, it can it can be a situation where it makes sense to up your contributions to a pension or something along those lines.
Luke:Yeah, but that's one thing that is being quite flown, is there there is talk that actually this kind of whole thing about being able to make pension contributions and it being really tax efficient to reduce your earnings, there is a kite being flown as to whether you know actually they are going to reduce some of the attractiveness of that, whether it's just from an employer's perspective. So an employer at the moment doesn't pay national insurance if your employee contributes to your pension voluntarily on that element of it, um, as to whether that will be changed. Um, and likewise, obviously, as you know, which is why people do it, is that if you um contribute voluntarily, you don't pay income tax on it and whether that remains the same as well.
Dr James:Interesting. You know, you traditionally the October-November budget is a mini budget, but it seems like there's quite a lot they're going to throw around here and change.
Luke:Yeah, well, obviously, you know, I think when she came to power, she wanted to have one fiscal event a year. Obviously, it didn't go 100% to plans, so she had to do a mini fiscal event in the spring. But yeah, the idea is now we have one, you know, key big autumn budget where all the balls go in the air and we have to see where they land.
Dr James:Right, interesting. And which way around is it? Is it usually the October one that's more sweeping or the spring one?
Luke:So the autumn the autumn budget isn't isn't is the big one. So this is the one where we where we expect the tack the tax changes because that lines it up in essence for the forthcoming next financial year.
Dr James:Yes, okay, fair enough. And then there was one other thing that you said there that was quite interesting. Yeah, we were talking just to bring the conversation back to the income tax thing that we mentioned just a second ago. It's it's interesting because they haven't changed the percentage. Well, sorry, they haven't put up the percentages for like 20 years or something along those lines, but they haven't changed the banding either, which in effect is a tax rate because obviously inflation catches up a little bit on those gradually with time. Uh so we we we kind of are getting tax is taxation by stealth. It's the stealth it's it's the it's the classic stealth tax inverted commons, isn't it?
Luke:That uh taxation by stealth. So what you've got is you've got a bit of internet issues here. I think that yeah, so we've got a bit of taxation by stealth, yeah, because they've frozen the the the budgets for um sorry, the as you said, the uh the thresholds for years, um, and they reckon every time they freeze the thresholds for another year, it brings in another 8 billion pounds worth of tax, just purely, as you said, on the basis of wage inflation. Because I think wage inflation at the moment in the private sector sits around 4.2% and in the public sector around 6.6%. Um, so every year everyone's earnings go up by those corresponding percentages, which means in theory, you have a lot of people that then move up a tax bracket if they sit on the thresholds. Um, so you may have someone who, you know, five years ago you know sat comfortably in the basic income rate tax threshold paying 20% and now through various different pay rises um over the years, which may just be inflationary and they might be in the same job. They may find that the last two grand of what they earn for argument's sake, they're suddenly paying 40% tax on which they weren't before.
Dr James:There we are. Luke, thank you so much for these insights. Any more insights, or would you say those are the salient points to cover?
Luke:No, the the one thing which I did I did think I previewed at the beginning, which is probably just worth mentioning, is what we always do get before the budget is we get that what they're gonna do in national living wage for the forthcoming year. Now it's touted that we think they're gonna put up about 4%. So we think it's gonna go up from 1221 to around the £12.70 mark, um, which obviously for a lot of dental practices, particularly through your ancillary staff, will then have that flowing 4% effect through the practice. Because whilst you may not be paying your staff, you know, national living wage, of course, if you've got someone who sat on £13 an hour for argument's sake, and all of a sudden, you know, and they were 80 pence away from um national living wage, and now they're 30 pence. The expectation is they're gonna expect a 4% rise to maintain that margin. So last year, of course, we had a massive rise. We think it's gonna be a little bit more sensible this year at 4%. I'm sure there's lots that would like it to be lower than 4%. Um, but we think that it's gonna be around the 1270 mark.
Dr James:Wow, okay, interesting. And look, it is also something you mentioned earlier that is is is quite useful uh to the audience that we have of dentists is you do actually have a market report that you release every year, I believe, uh, under the Technical League banner and it covers this stuff.
Luke:Yeah, so some of the insights I kind of gave for the first sort of 15 minutes or so are all from our interim goodwill report, um, which we're releasing in January. So um you can obviously go onto our website and join our mailing list um so you get that as soon as it's launched. Um, or likewise, I'm sure we'll be doing some promotion around the time, um, but it will talk a lot more in depth about what different tiers of um groups are buying practices for, the kind of assets that they're buying, um how that plays into multiples and pricing.
