Taxes for Dental Associates

Taxes can feel confusing for many dental associates, especially if you have just qualified or you are splitting your time between different practices. The reassuring part is that once you understand the essentials, handling your income, tracking your expenses, and planning your pension becomes much simpler.

In this guide, you’ll find a clear breakdown of how Income Tax and National Insurance work for dental associates, how self-assessment and payments on account are worked out, which expenses you are allowed to claim, and the important things to know about NHS and private pension options.

Income Tax and National Insurance Explained

How Dental Associates Are Taxed

In the UK, most dental associates work as self-employed sole traders. This means you are in charge of recording your own income, keeping track of your business costs, and paying your Income Tax and National Insurance yourself.

Your tax is not based on the total money you earn from all your practices. Instead, it is worked out on your taxable profit, which is simply:

Taxable profit = Total income from all practices minus your allowable business expenses

Both Income Tax and National Insurance are calculated using this profit figure, not your full turnover. Since you are self-employed, you need to submit a Self Assessment tax return each year to report these profits.

Income Tax Bands for Self-Employed Associates

Here are the Income Tax rates and thresholds for the 2025/26 tax year. These apply to non-Scottish, non-savings and non-dividend income.

• Personal Allowance: £12,570. This is the amount you can earn before you start paying Income Tax.
• Basic Rate (20 percent): Applied to taxable income between £12,571 and £50,270.
• Higher Rate (40 percent): Applied to taxable income from £50,271 up to £125,140.
• Additional Rate (45 percent): Applied to income above £125,140.

Tapering of the Personal Allowance

If your adjusted net income goes over £100,000, your personal allowance is reduced. It goes down by £1 for every £2 you earn above the £100,000 mark.

Once your income reaches about £125,140, your personal allowance is removed completely. At this point, you no longer receive the £12,570 tax-free amount.

This reduction can create a very high effective tax rate within that income range, so higher-earning associates should be extra aware of how this affects their overall tax planning.

National Insurance (NI) for Self-Employed Associates

As a self-employed dental associate, you usually pay two types of National Insurance: Class 2 and Class 4.

Class 2 National Insurance

For 2025/26, the small profits threshold is £6,845 a year.

If your profits are below this amount, you do not need to pay Class 2. However, you can choose to make voluntary payments to keep your National Insurance record up to date, which helps with your state pension and certain benefits.

The voluntary rate for 2025/26 is £3.50 per week.

Class 4 National Insurance

Class 4 contributions are based on your profits, not your total earnings.

For 2025/26, the rates are:

• 6 percent on profits between £12,570 and £50,270
• 2 percent on profits above £50,270

These profit bands match the lower and upper profit limits used for National Insurance calculations.

How Tax and NI Work Together

As a self-employed dental associate, you pay both Income Tax and National Insurance on your taxable profit.

Because allowable business expenses reduce your profit, your taxable amount is often much lower than your total earnings from different practices. This means your overall Income Tax and NIC bills can be noticeably lower than they first appear.

However, once your profit rises into the middle or higher ranges, you may still face the following:

• Income Tax at 20 percent up to the higher-rate threshold, then 40 percent, and possibly 45 percent for the highest earners
• Class 4 NICs at 6 percent up to £50,270 and 2 percent above that level

Good planning becomes essential. For example:

If your taxable profit is £60,000, part of your income will be taxed at 40 percent, and your NICs will be charged at both 6 percent and 2 percent depending on the band.

For those earning over £100,000, the gradual removal of the personal allowance can push your effective tax rate much higher.

Why this matters for dental associates

• Cash flow planning: Since tax is not taken automatically through PAYE, you need to put aside money regularly to cover your Income Tax and NICs.
• Expense strategy: Claiming all legitimate business expenses reduces your taxable profit, which lowers both your tax and NIC bill.
• High-earner considerations: If you earn above £100,000, losing your personal allowance can significantly increase the amount of tax you owe, so early planning is important.
• Retirement planning: Your NIC payments contribute towards your state pension record. Even when Class 2 payments are voluntary, many associates choose to pay them to keep their contribution history complete.

Self-Assessment and Payments on Account

What Self-Assessment Involves

Since you are self-employed, you need to complete a Self-Assessment tax return every year. This return reports your income, expenses, pensions, and other financial details.

Key responsibilities include:

Registering as Self-Employed

If you work as a self-employed dental associate, you must register for Self Assessment with HMRC. If it is your first time filing a tax return, you need to register by 5 October after the end of the tax year.

Once you register, HMRC will send you a Unique Taxpayer Reference, often called a UTR. You will need this number every time you file a return.

Keeping Accurate Records

You must keep full and accurate records of all income from every practice you work with, along with all your business expenses.

Many associates use accounting software, but a clear spreadsheet also works. Make sure you track receipts, invoices, mileage, pension contributions and anything else that relates to your business. These records form the foundation of your tax return.

Good record-keeping helps you file correctly and ensures you claim all the expenses you are allowed.

Filing by the Annual Deadline

For the 2024/25 tax year, which runs from 6 April 2024 to 5 April 2025, the deadline for filing an online Self Assessment is 31 January 2026.

If you prefer to send a paper return, the deadline is earlier, on 31 October 2025.

Missing these deadlines can lead to penalties. The first penalty is a fixed £100, and further charges can be added the longer you delay.

Paying Tax Owed on Time

Your Self Assessment will show the total amount of Income Tax and National Insurance you need to pay.

The final balance must be paid by 31 January following the end of the tax year.

If payment is late, HMRC can charge interest on the amount you owe, so it is important to plan ahead.

Understanding Payments on Account

Payments on account are advance payments towards your next year’s Income Tax and Class 4 National Insurance bill. They are designed to spread your tax costs so you are not left paying everything in one go after filing your Self Assessment.

Each payment is usually half of your previous year’s combined Income Tax and Class 4 NIC bill.

When Are They Due?

• The first payment is due by 31 January
• The second payment is due by 31 July

For example, for the 2024/25 tax year, the first payment on account is due on 31 January 2025 and the second on 31 July 2025.

When Can You Avoid Payments on Account?

You do not have to make payments on account if your previous year’s tax and Class 4 NIC bill was £1,000 or less.

You can also avoid them if at least 80 percent of your tax was already collected through tax deducted at source, such as PAYE.

Balancing Payment and Adjustments

What Is the Balancing Payment?

After you file your Self Assessment, HMRC works out your final tax bill. If the payments on account you made are not enough to cover the full amount you owe, you must make what is called a balancing payment.

This balancing payment is due on 31 January following the end of the tax year. It falls on the same day as the first payment on account for the next year.

Overpayment Means a Refund

If your payments on account end up being more than your actual tax bill, you can claim a refund or choose to have the extra amount carried forward to reduce future payments.

If you have underpaid, meaning your payments on account and any tax already deducted were not enough, you will need to pay the remaining balance.

Adjusting Payments on Account

If you expect your income for the year ahead to be lower than the previous year, you can ask HMRC to reduce your payments on account.

You usually make this request through your Self Assessment by giving an estimate of your lower tax liability. However, take care with your estimate. If you reduce your payments too much and your income turns out to be higher, you may need to pay the difference later, and HMRC may also charge interest.

Tips for Managing Your Tax Bill

To avoid stress and last-minute problems:

Set Aside Money Regularly

Put a percentage of your income into a separate savings account each month, such as 20 to 30 percent. This helps you build up enough for your tax and National Insurance bills and keeps your cash flow steady, so the January and July payments do not come as a shock.

Use Accounting Software

Tools like QuickBooks, Xero or FreeAgent make it easier to record your income and expenses. They can also produce profit estimates, which help you work out how much tax you might owe and how much you should be saving.

Plan for Payments on Account

Payments on account are based on your previous year’s tax. If your income is increasing, these advance payments might not be enough. Keep an eye on your earnings throughout the year, and adjust your plans if needed so you do not face a large unexpected bill.

Consider a Specialist Dental Accountant

An accountant who understands the dental field can help you:

• Estimate your tax bills
• Claim all the expenses you are entitled to, such as indemnity, GDC fees and travel
• Make more accurate payment on account calculations
• File your Self Assessment and deal with HMRC on your behalf

Use HMRC’s Online Services

Your HMRC online account lets you view your Self Assessment statements, check how much you owe, see what you have already paid and get reminders for important dates.

Plan Ahead if You Expect Payment Difficulties

If you think you may struggle to pay your tax bill, you can apply for a Time to Pay arrangement with HMRC. This lets you spread the cost over several monthly instalments instead of paying everything in one go.

Why This Matters for Dental Associates

Self-employed dental associates can face large and sometimes unpredictable tax bills, especially when income increases or working arrangements change. Payments on account help spread the cost, but they need careful planning.

Because dental associates often spend money on equipment, training, indemnity and practice-related costs, your profit can vary a lot from year to year. This makes estimating your future tax more challenging.

Missing filing or payment deadlines can lead to penalties and interest, so staying organised is essential.

Good financial planning gives you more control, fewer surprises and a stronger foundation for both your business and personal goals.

Typical Expenses Dental Associates Can Claim

Dental associates and practice owners can claim a wide range of allowable business expenses to reduce taxable profit and manage cash flow effectively. HMRC permits deductions for costs that are wholly and exclusively related to your dental work. These can include clinical costs, professional fees, equipment, travel, software, use of home, and more.

Below is a brief overview of the types of expenses covered in our full guide.

Key Categories of Allowable Expenses

Clinical & Professional Costs

• GDC fees, BDA membership, indemnity insurance
• CPD and training to maintain existing knowledge
• Conferences, seminars and study clubs
• Professional books, journals and reference materials

Equipment & Materials

• Dental instruments, loupes and clinical tools
• Handpieces, digital cameras and protective equipment
• Consumables and dental materials
• Capital Allowances for larger equipment (e.g., loupes, iPads, cameras)

Travel & Mileage

• Mileage between practices; travel to courses and training
• Train, bus, taxi and parking for business journeys
• Rules on commuting and avoiding over-claims
• Option to claim mileage or a % of actual car costs

Use of Home as an Office

• HMRC flat-rate allowance or actual cost method
• Allowable household expenses when used for admin
• How to apportion business vs personal use

General Business & Administrative Costs

• Stationery, printing, postage, and office supplies
• Business bank charges
• Practice management and accounting software
• Website, marketing and advertising costs
• Business proportion of mobile phone and broadband bills

Other Allowable Expenses

• Uniforms and laundry
• Study texts and digital learning platforms
• Costs of replacing or contributing to laptops or printers used for work

NHS Pension and Private Pension Considerations

Pension planning is one of the most important aspects of financial management for dental associates. Whether you work partly in the NHS, fully in private practice, or a mix of both, understanding your pension options ensures long-term financial security and tax efficiency.

NHS Pension for Dental Associates

If you do NHS work, whether through an NHS contract or in a mixed practice, you may be able to join the NHS Pension Scheme. It’s considered one of the strongest public sector pension schemes in the country.

Key Features of the NHS Pension Scheme

• Defined Benefit scheme: Your pension is worked out using your salary and years of service. It does not depend on how investments perform.
• Protection against inflation: Your benefits rise each year in line with inflation (CPI).
• Support for your family: If you pass away, your spouse, partner, or dependents may receive benefits.
• Ill-health cover: If you are unable to work because of illness, the scheme offers improved benefits.

NHS Pension Contribution Rates (2024/25 onwards)

Dental associates pay contributions based on their pensionable earnings, not just their profit.

Contribution tiers

(These rates follow the updated NHS Pension Scheme structure.)

What Associates Should Know

• Your contribution rate can rise sharply once you reach the higher bands, especially if you have more than one NHS contract.
• Pensionable income is based on your Net Pensionable Earnings, which is usually your NHS income minus approved NHS expenses.
• Because this is a defined benefit scheme, the long-term value is often very good, even if the contribution levels feel high.

Annual Allowance and Potential Tax Charges

The NHS Pension Scheme is very generous, but that also means some higher-earning dental associates can run into problems with the Annual Allowance.

Understanding the Annual Allowance

Standard Annual Allowance: £60,000 per tax year.

For higher earners, this can reduce to as little as £10,000 depending on your adjusted income.

Adjusted income is your total taxable income plus the value of your pension growth.

Why Dental Associates Often Get Caught

With a defined benefit pension, it is not the amount you pay in that matters for the Annual Allowance. What counts is how much your pension value has grown in that year.

If you have a strong NHS earning year or receive a pay rise, your pension growth can be quite high. This can push your pension input amount over the Annual Allowance limit.

What Happens if You Go Over the Allowance

If your pension growth goes above the limit, you may need to pay an Annual Allowance tax charge. The good news is that you can deal with this in a few ways:

Scheme Pays: the NHS Pension Scheme can pay the charge for you, and you take a small reduction in your future pension.

Speak to a specialist adviser who understands the mix of NHS and private income.
Ask for your NHS Pension Savings Statement every year, especially if your pension growth is close to or above the limit.

This helps you stay on top of things and avoid surprises at tax time.

Private Pension Options

Whether you join the NHS pension scheme or not, dental associates can also boost their retirement savings through private pensions while lowering their tax bill at the same time.

• Personal or Stakeholder Pensions: These are simple, low-cost plans where the provider handles most of the investment decisions for you.
• Workplace Pension Through a Private Practice: Some practices enroll associates into their workplace pension if the contract treats them as workers. This varies from clinic to clinic.
• SIPPs (Self-Invested Personal Pensions): These offer the most flexibility. You can choose where your money goes, including funds, shares, bonds, or even certain types of property funds.

Tax Relief on Private Pension Payments

Private pension payments reduce your taxable profit, which means:

• You automatically receive 20 percent basic rate tax relief
• If you pay higher or additional rate tax, you can claim extra relief through your Self Assessment
• Your Class 4 National Insurance may also reduce, as your profit is lower

Example: If an associate earning 90,000 pounds puts 10,000 pounds into a pension:

• They get 2,500 pounds added automatically as basic-rate relief
• They can claim another 2,500 pounds through Self Assessment
• This means they effectively spend only 5,000 pounds to add 10,000 pounds to their pension

Choosing Between NHS and Private Pension

There isn’t a single “perfect” pension plan that works for everyone. Most dental associates use a combination of options, depending on their income, workload, and long-term goals.

Common Strategies Associates Follow

• Stay in the NHS Pension Scheme for guaranteed benefits that rise with inflation.
• Add a private pension (like a SIPP) to boost savings and help with:
  • tax planning
  • flexibility
  • building extra retirement funds
• Put more into private pensions during higher-earning years.
• Reduce contributions when cash flow is tight.
• Keep an eye on your Annual Allowance to avoid unexpected tax charges.
• Plan contributions around tax thresholds, for example increasing pension payments if your earnings go above 100k so you can keep your personal allowance.

When You Should Get Professional Advice

It’s worth speaking to a financial adviser if:

• Your taxable income is close to or above 100,000
• You think your NHS pension growth might be more than the Annual Allowance
• You earn from both NHS and private work
• You want to balance your NHS and private pensions in the most efficient way

Why Pension Planning Matters for Dental Associates

The NHS pension is one of the strongest defined benefit schemes in the UK, but it can be complicated.
Private pensions offer flexibility, tax advantages, and more control.

Understanding contribution rates, Annual Allowance limits, and tax relief can save dental associates thousands of pounds every year.

For most people, a balanced approach offers the safest and most beneficial long-term results.

Final Checklist for Dental Associates

This checklist is designed to help you stay organised all year round and avoid unexpected issues with tax, pensions, cash flow, and your financial paperwork. It is created especially for self-employed dental associates in the UK.

Monthly Checklist

Record Your Income and Expenses

• Keep your bookkeeping software updated, such as Xero, QuickBooks, or FreeAgent.
• Save digital copies of your receipts – HMRC accepts photos or scanned copies.
• Track your mileage using the HMRC rates:
  • 45p per mile for the first 10,000 miles
  • 25p per mile after 10,000 miles

Put Money Aside for Tax

A general rule to follow:

• Set aside 25 to 30 percent of profits if you pay basic-rate tax
• Set aside 40 to 45 percent if you are a higher-rate taxpayer
• Set aside 45 to 50 percent if your income is above £100,000

This covers Income Tax, Class 2 NI (3.45 per week), and Class 4 NI (between 6 and 9 percent depending on your profit).

Check Practice Statements and NHS Payments

• Make sure all UDA and UDC payments have come through correctly.
• Confirm private income from each practice.
• Check any lab fees or materials deducted from your pay.

Review Your Cash Flow

• Income for dental associates is often irregular due to NHS payment cycles, private patient demand, and occasional locum work.
• A quick monthly check helps you stay in control.

Quarterly Checklist

Review Your Cash Flow and Profit

Ask yourself:

• Are you earning more or less than last quarter?
• Are your expenses increasing?
• Are you now working in more practices?

This helps you adjust your tax savings if needed.

Make Sure All Expenses Are Updated

Many associates forget costs such as:

• Subscription renewals (BDA, indemnity insurance)
• CPD fees
• Software payments (Dentally, Cliniko, QuickBooks, Adobe)
• Equipment like loupes or instruments

These small items matter, as they reduce your taxable profit.

Check Your Payments on Account

Payments on account surprise many associates. You must pay them if your previous tax bill was over £1,000.

• 31 January – first payment (50 percent)
• 31 July – second payment (50 percent)

If your income is increasing, expect a larger balancing payment next year.

Adjust Your Savings if Income Rises

If you earn more:

• You may move into a higher tax bracket
• You may need to save a bigger percentage for tax
• You may want to increase pension contributions to reduce taxable profit

Yearly Checklist

Prepare Your Self-Assessment Early

Avoid the January pressure. Key dates:

• 5 October – register with HMRC if you are newly self-employed
• 31 January – file your return and pay your tax
• 31 July – second payment on account

Filing early helps you know your tax bill months in advance and gives you time to plan.

Review Your Pension Contributions

For both NHS and private work:

• Check your NHS pensionable earnings
• Request an Annual Pension Savings Statement if required
• Keep within the £60,000 Annual Allowance
• Consider adding to your private pension (such as a SIPP)

Private pension contributions reduce taxable profit and can save you:

• 20 percent (basic-rate)
• 40 percent (higher-rate)
• 45 percent plus allowance benefits (additional rate)

Speak to Your Accountant About Tax-Saving Opportunities

Things to review include:

• Home office allowance (flat rate or actual use)
• Whether incorporation is suitable if you earn over £100k to £120k
• Equipment purchases and capital allowances
• Eligibility for the Trading Income Allowance
• National Insurance planning
• Better recordkeeping
• Full reviews of CPD, travel, subscriptions, and more

Review Your Financial Goals

End-of-year is ideal for checking:

• Income goals for the next year
• How many practices you want to work with
• Your savings habits
• Protection policies such as income protection or life cover
• Long-term retirement plans

Your Year-Round Financial Routine

Following this checklist will help you:

• Track income and expenses properly
• Stay prepared for tax
• Claim all allowable expenses
• Avoid pension-related charges
• Build long-term financial stability
• Stay organised and confident with your finances

A steady routine can save you money, reduce stress, and help you feel fully in control of your work as a dental associate.

Conclusion

Managing your taxes as a dental associate doesn’t have to be difficult. Once you have a clear understanding of Income Tax, National Insurance, expenses, and pensions, it becomes much easier to plan ahead and avoid any unexpected issues.

With good recordkeeping, smart tax planning, and the right professional advice, you can hold on to more of your hard-earned income and build a secure financial future.

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About the Author

Neha Jain

Neha Jain is a skilled content writer with a rich background in business and financial knowledge. With a bachelor’s degree in English Literature and Psychology, Neha has honed her writing skills, furthering her expertise with the Content Writing Master Course (CWMC) at IIM SKILLS and a Content Marketing Certification from HubSpot Academy.

Working alongside our business development experts, Neha specialises in helping accountants, dentists and other healthcare professionals start, scale and sell their businesses.

Read more of Neha’s articles.

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Reviewed by:

Arun Mehra

Samera Founder & CEO

Arun, founder and CEO of Samera, is an experienced accountant and dental practice owner. He specialises in accountancy, building businesses, financial directorship, squat practices and practice management.

Follow Arun on LinkedIn.