Dentists Who Invest Podcast

Here's What The Upcoming Tax Deadlines Mean For Your Investments with Anick Sharma [CPD Available]

• Dr. James Martin • Season 4 • Episode 417

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Tired of the 31 January scramble and the sting that follows? We take the stress apart and rebuild it into a calm, structured plan for dentists who want to pay less tax and gain more freedom. With expert planner Anick Sharma, we dive into the practical moves that matter: company-paid pension contributions that cut corporation tax, how to avoid the 60% effective rate trap as a sole trader, and the right way to coordinate your accountant and planner so nothing slips through the cracks.

We get honest about the NHS pension and why the annual allowance can ambush even savvy clinicians. You’ll hear how carry forward works in practice, when to proceed with caution, and why timing and accurate inputs make the difference between relief and an unexpected charge. Then we widen the lens beyond pensions: claiming allowable expenses and capital allowances, placing insurance in the most tax-efficient way, and choosing a salary-dividend split that actually matches your goals rather than last year’s guess.

Money sitting idle is another hidden cost. We break down a simple, proven approach to cash versus investing: match money to purpose across short, medium, and long horizons so liquidity is there when needed and growth is there when wanted. Real-world stories show how defining your destination first can unlock capital that’s been parked for “safety,” turning it into a portfolio that powers your plan. The takeaway is clear and actionable: know your point B, then pull the right levers—pensions, allowances, and disciplined extraction—to reach it faster with fewer January shocks.

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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.

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Dr James:

Everybody knows that January the 31st means that there's a deadline for us to fill in our tax returns, so what do we need to know going forward in order that we might be as tax efficient as possible with regard to our financial planning outlook? That's why I'm joined today by Mr. Anick Sharma, expert financial planner and co-founder of Videre Financial Planning. We'll be talking about everything that you need to know as a dentist in order to minimize your tax burden in the years going forward. What do dentists and I know I know that we talked about this off-camera, and really it's more one for the accountants, but even if we were to just summarize what dentists need to know and need to do whenever it comes to their financial planning for the 31st of January, is there anything from your side or is it just a case of getting their tax returns in order?

Anick:

Board plan, be proactive, uh, be ahead of the game. Now I appreciate uh as dentists, as people, we are all incredibly busy. So trying to forward plan way in advance can be difficult. Um, but the best way to reduce that tax bill is by forward planning so that we don't get to the 31st of Jan and have to pay a bit of a stinger. So between now and the 31st of Jan, there's not a lot that can be done because what you need to do, what what our the listeners need to do is just pay the tax bill. However, we're soon going to be going into a new tax year. So currently we're in the 25-26 tax year, and the the bill will be due at the end of the 31st of Jam following the end of that year. So now's the time to get ahead, think about what we're doing and how we can optimize so that when it comes to the next bill, we hopefully don't have to pay as much to the taxman.

Dr James:

Sounds good. Every dentist likes the sound of that. So let's segue straight on to that exact thing. Now, the obvious ones is the obvious tax mitigation method is pension contributions, right? And I know that everyone knows that one, but it's it's still worth talking about, right?

Anick:

Yeah, so let's unpack this a bit. Let's start with those that have a limited company. So employer pension contributions from the limited company to your personal pension, they are tax deductible. So corporation taxes sliced off essentially. That has the benefit of moving money from the company balance sheet to your personal balance sheet, um, de-risks the position, and you you move forward tax efficiently. Now, there are in an incredible amount of nuances over how much you can put money into a private pension. And what massively complicates things um is the interplay with the NHS pension. We can probably do a whole podcast on that. In fact, I think you did one with Luke recently, didn't you, on this?

Dr James:

Yeah, we got that in the in the in the annals somewhere. Uh so yeah, shout out to that podcast with Luke Hurley. I believe it's called How the NHS Pension Actually Works.

Anick:

Yeah, great listen. But essentially for the annual allowance, and that's a bit of jargon, which means how much you can put into your pension. Things are complicated when it comes to the NHS pension. So that aside for a moment, um, maximizing the amount that you can put into your pension is it's very useful. It's so tax efficient. So by by doing so, you're getting that corporation tax saving, you're not having to pay as much, essentially. You keep more in your pocket, which is what everyone wants.

Dr James:

From the the can I ask a question just on that? Because here's something that dentists ask all the time, and I'm actually not too sure of the answer myself. You know the way, whenever it comes to working out how much of your annual allowance is remaining post your NHIS pension contributions, when you need to calculate that number, is that the remit of an accountant, or is that the remit of a financial planner, or can it be either?

Anick:

So an accountant is typically a financial planner, is a short answer. Accountants generally, and I'm not speaking for all here, will stay away from this sort of stuff. Um it's just you end up chasing your tail a bit because if you want to make the contribution in the current tax year, well, you only really get the information, the NHS-related information at the end of the tax year, which means there are even more complications over a facility called Carry Forward where you can use the the last three previous years of allowances. So it ends up in a bit of a rolling situation, um, and you can end up in a real mess, particularly if the NHS um uh annual allowance amount or the pension input is is quite high. So if if that is you, proceed with caution. It's so easy to get it wrong.

Dr James:

There we go. Hot and fast take. Good to know. Thank you so much. You were in full fluid just before I jumped in there.

Anick:

So from the for the sole traders out there once you go over 100k of income, everyone well, you may not have heard to be fair, but your personal allowance, i.e., the first 12,500 pounds that's taxed at zero, is reduced. So you can end up in a bit of a sweet spot between 100 and 125k where the effective rate of tax is 60%, which is not a nice place to be. So by making pension contributions for tax purposes anyway, your income is reduced by the gross amount of that contribution. So depending on what where your income is, it might be advantageous to consider the pension contributions because you get tax relief, higher rate or additional rate tax relief, that basically means it's cheaper for you to make those contributions. You bring your tax bill down and you're you're building for your future because um when you eventually um say that's enough with dentistry, you you've got the provisions to go off and do whatever you want, and that might be retirement or a different phase in life, but it's a a it's a win all round. So by being clear with what the forward planning mechanisms, the levers that we can pull are, we put ourselves in the best position.

Dr James:

Boom. And and and after, and now that we've covered pensions, which is great, and that's that's one of the most obvious ones, and I know we all know it, and it's good to cover that in more detail, which is what we have done today, so that we know the full ins and outs of it. Let's talk more broadly now about other mechanisms that there are to manage our tax bill prospectively from a financial planning perspective.

Anick:

Yeah, so again, for those that have a company, make sure everything is efficient and running through it, allowable expenses, um, capital allowances, etc., have been claimed. That's very much an accountant piece, so work hand in hand with them. If you have certain policies, so insurance policies, depending on how it is set up, um, you might be able to put them through the the company. So that's really important to take a step back, review things regularly, make sure that you are on track for that for your financial organization. And if any changes need to be had, then do that, make it more efficient. Within companies themselves, make sure you are extracting money out of tax efficiently, and the split between salary, dividends, etc., is appropriate for you as well. Um, they're some of the main ones.

Dr James:

Yes, again, remit of an accountant, but good to cover. And you know what? I'd love to shout out another podcast right now. I did a podcast with a lovely gentleman called Johnny Minford, and it's all about what qualifies as tax deductible and what isn't. And if I'm not misremembering it, the title is something along the lines of is my Rolex slash uh dental loop slash something else tax deductible? There's definitely the word Rolex in there somewhere. We had a bit of a playful title on that one. But yeah, that's another good one to look up so you can understand what qualifies as tax deductible and what doesn't. And out of curiosity, is Rolex deductible? Uh it's not tax deductible. I believe it's a capital expense, so it comes after corporation tax, but you can buy it through the limited company, uh, was was was the revelation on that front. But then again, you might argue why um it's worth it, because I believe it also qualifies as something called a chassel, which means I'm not sure if I've got the quite the pronunciation right on that, which means that if it's hell in your personal name, there's and you sell it on at a profit, whatever the profit is, there's no capital gains liable anyway. Uh so you might argue it's worth taking the tax hit in that specific example. Anyway, interesting fact, isn't it? But yeah, so it was that was that was I I recall that very clearly from that podcast. I love little uh trivia and factoids like that. But anyway, onwards, uh believe we had some more to cover.

Anick:

The key thing is being financially organized. Um be clear with with what you want to do around pensions, understand the implications of the NHS, the interplay, being a sole trader, where your earnings are at. If you have a limited company, understand and make sure everything is being put through and allowable uh deductions are being claimed. Um thereafter, there's probably a wider piece of your financial planning needs. Um it can be easy to get bogged down in the here and now, but take a step back, think about the why the purpose, the why, what does your point B look like? Because it's all well and good doing a certain strategy or pulling those levers we've just been through. But until you you take the time to define what point B looks like, it can be difficult to say whether one strategy or one intervention is better than the next. Um, I've used this analogy loads with you, James, but it's a bit like saying I'm in London and I'm gonna drive somewhere. Unless you know whether you're going to to Edinburgh or across to Cardiff, how do you know if you're going up the M1 or across the M4? So take the step back, have a think about what you want the money for, create a plan for it, and then look at the implementation and strategy to help get you there. And that might be some of those um components that we've just mentioned.

Dr James:

There's that quote uh by Seneca: if a man knows not to which port he sails, then no wind is favorable. And I really like that. I really, really, really like that because you literally have no measurement or ability to equate whether or not something is actually pushing you in the right direction unless you've defined that endpoint in the first place. You don't know if it you don't know where that is geographically and relative to yourself, what vector that you need to go on, how can you say that you're on the right vector per se? You're just drifting aimlessly. So I think that that that imagery of that quote is uh rather emotive. Can you give us an example of a case study anonymized, of course, where someone defined their endpoints and that allowed them to save on tax more in the here and now uh from the point of view of planning, and then also allowed them to be more profitable in their investments as well, just so we can really bring that home for the audience and visualize it?

Anick:

Every single client we've ever dealt with, James. So the way we go through the process at Videre is that we'll create a financial plan. I will map out where someone is at the moment, point A, then go on to what does the future hold? What is it you really want? What about how many holidays you want to go in a year, how many times to Disneyland or travel around Africa or whatever else it might be. Once we map out point B, we can, using a cash flow model, sophisticated modeling software, map out the different levers, um, the strategies, how we should get there. And that means we can set up the investments appropriately, because without the context of a financial plan, it's a finger in the air. How do you know what is the most optimal investment to go for? You don't. But once we do that, we can discount back, put the steps in place to get there, and structure it so the the most amount of return is delivered and profitability and all these sort of things are achieved.

Dr James:

I think one way that we could also demonstrate that to the audience is let's say for example, and this happens all the time, you know, at any level, you know, you see people they've got 10,000 in a bank account, 100,000 in a bank account, or even a million sometimes, and it's in cash. Now, until you've actually defined how much you need, you're almost clinging on to that cash from the point of view of a safety perspective, a perspective of safety. And what I mean by that is let's say you've got 100k in the bank account and your outgoings are 20 grand every year, something along those lines, or you plan to spend 20 grand on holidays every year, or something along those lines, then in that specific example, if you only need 20 grand in the next year, potentially the other 80k could be working for you. But until you've actually defined how much you need, well, you don't know how much is on the table and it's potentially investable. Obviously, that's a really crude example, and there's a lot more variables there. But what I'm trying to say is that really by calculating that endpoint and how that might look and what your objectives are, is it literally makes you more money because all of a sudden that 80k of capital can be put to work. Whereas in the previous example, if you didn't know that you needed 20k, you were just licking your finger, put it in the air, you might keep all the cash, the 100k cash liquid, which of course means that you're missing out on opportunities, the the opportunity of the market effectively. And I know that it doesn't quite work like that. You know, there's more variables in there, of course, but it's a very simple example as to how that can be beneficial.

Anick:

100%. And the other thing that we do or how we help people is that it's not all about investing because we need to build up to that point. There are short-term liquidity needs, short, medium-term liquidity needs. It's not all about sticking it all in the market, it's about aligning your plan with the portfolio. The portfolio powers the plan. So we don't want to be in a situation where we have a house purchase in three to five years. We've invested a load in the market and the market takes a bit of a wobble. All of a sudden we're 20% down, which is a really normal outcome. And what are we going to do? We're just taking a huge haircut on the house deposit or the next house purchase or whatever it might be. So although we talk loads about the long long term, it within a 360 holistic financial planning perspective, it's about booketing between the short, medium, long, etc., and making sure the the things are in place to optimize for those parts of life.

Dr James:

And you know, another example springs to mind actually. I remember uh obviously this is all anonymized, of course, but I remember talking to one particular chap, and he was bringing in 20K a month in his dentistry. So he was doing really well financially, and he was 40 in his early 40s, something along those lines, and he had 800k in a limited company, just sat there as cash. And I always remember that guy, and I always remember thinking to myself, you know, that's a really good example of someone who has done really, really, really well in dentistry, really successful, earning a load of money, brilliant. Like they've really focused on getting their cash flow to a really great level. And this dentistry was phenomenal as well. But because they had never taken the time to understand the investing side of things and defining their objective uh and their goals, and either DIY'd it or went down the route of having a financial planner or however they decided to do it, but because they'd never they'd never broached into that world, then what that meant was that the 800k that they had just there then, which was in cash, could have feasibly been enough to walk away from uh potentially walk away from dentistry or at least reduce their commitment. So that's a good example of how you really need to get both sides right. You really need to think about the financial planning side of things just as much as your dentistry, because even though that guy earned a lot of money, 20 grand a month, he was in a place where realistically you might think that someone like that should be able to retire a lot earlier, and they should be, is the answer. But he couldn't because he'd never thought about the investment side of things, and it probably was going to take him another 10 years at the very least, until he had a pot that was significant enough to allow him to do what he liked, which was to reduce his equipment from dentistry. Whereas if he would have just did it from the get-go, it would have been there. He might have had that 800k, it might have been like one and a half million, 1.6. Who knows, due to the power of compounding? What I'm saying is it really pays to think about this stuff. Anik, I think that is a wonderful note to end the podcast on. If anybody wants to reach out to you based on anything that we said today, is there a best way to get a hold of you?

Anick:

Um, find me on LinkedIn, Anick Sharma. Go to viderefinancial.com and reach out to me on the group, um, Facebook, etc., and come say hi. And we can always chat about these sort of things.

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Dr. James Martin

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