Are you ready for potential changes to tax status for associate dentists and hygienists? If not, read on….

HMRC has recently announced that its current guidance, which essentially categorises associates as self-employed, is to be withdrawn from 6 April 2023.

Who does this affect?

This affects associates as HMRC has always regarded them as self-employed providing they were engaged under the standard terms as agreed with the British Dental Association. Hygienists have never had a blanket agreement such as this and they should always have categorised on a case by case basis.

What will the impact be?

As a potential employer, if the engagement is deemed to be one of employment, you will potentially be exposed to additional National Insurance and pension contributions as well as having to provide the usual benefits available to employees, such as holiday pay and sick pay.

In addition to the impact on you as an employer, the worker may be disadvantaged by having to make employee pensions contributions as well as losing the flexibility that being self-employed brings.

What should I do?

You should review all engagements to ensure that from 6 April 2023 they are correctly categorised as self-employed. If the terms of engagement deem that employment is more appropriate, then the engagement terms must be changed or you should operate PAYE on their income.

What are the risks of doing nothing?

HMRC are likely to be ensuring the new rules are adopted from 6 April 2023. They have history in this area in relation to other sectors and it is likely that they will follow suit here. This could result in long running and costly tax enquiries.

The BDA has recently issued guidance (see here) recommending that practices review the employment status of associate dentists to ensure it is correct.

Failing to carry out a review could be seen as being careless and HMRC may seek to apply employment status retrospectively and recover tax, National Insurance, interest and penalties post 6 April 2023.

How can GS Tax Solutions help?

GS Tax Solutions has extensive experience in dealing with employment status both whilst working for HMRC, and in a tax advisory capacity. Please get in touch for a free consultation to discuss what we can do to ensure the best outcome for you and your workers.