Your post-Budget check-up: How dentists can prepare for 2026

Simon Cosgrove, Dental Regional Manager at Wesleyan Financial Services, breaks down the main headlines from the 2025 Autumn Budget – and how dentists can strengthen their long-term financial strategy throughout 2026 and beyond.

The 2025 Autumn Budget introduced several measures that will shape the financial landscape for dental professionals in the years ahead.

From income tax thresholds and pension changes to dividend rules and ISA reforms, these changes are likely to affect both personal finances and the day-to-day costs of running a dental practice.

Here, we run through the key takeaways from the Budget, helping you to understand the updates, safeguard your income and prepare for rising expenses.

Income tax thresholds frozen until 2031

One of the biggest takeaways from the Budget is the extension of the freeze on personal tax and National Insurance thresholds until 2031.

On the surface, no change to thresholds might seem neutral, but the impact of inflation means that many dentists will gradually find more of their income being pushed into higher tax brackets. This effect (known as ‘fiscal drag’) increases your tax bill even though rates haven’t officially risen.

Dentists who already sit within the 40% or 45% tax bands will feel this most acutely. Even small increases in earnings could pull a greater portion of income into higher-rate territory.

And those with income above £100,000 face an additional challenge – the tapering of the personal allowance. This creates an effective marginal tax rate far higher than the headline figures, noticeably reducing take-home pay.

For practice owners, fiscal drag carries operational consequences too. With minimum wage rates continuing to rise, staffing costs are expected to increase, placing further strain on practice budgets and potentially influencing hiring decisions and pay reviews.

Tax treatment depends on your individual circumstances and may be subject to change in future.

Salary sacrifice pensions: NIC relief capped from 2029

From April 2029, the first £2,000 of annual pension contributions made through salary sacrifice will remain free from National Insurance contributions (NICs). Anything above that will be subject to both employer and employee NICs.

Although many dentists operate as self-employed clinicians and may not use salary sacrifice personally, practice owners who offer it to employed team members should be aware that the NIC advantage for staff will be limited beyond the £2,000 threshold.

Increases to dividend, savings and property income tax

A significant number of dentists earn income from more than their salary – whether through company dividends, property portfolios or investment returns. A number of Budget measures will directly affect these streams:

• Dividend tax rates rise by 2% from April 2026, taking the basic rate to 10.75% and the higher rate to 35.75%. The additional rate will remain at 39.35%.
• From April 2027, tax on savings and rental income will also increase by 2% across all bands.

For dentists drawing profits via dividends or relying on investment or rental income, these changes will reduce overall net returns.

Practice owners operating through a limited company may now find it less tax-efficient to withdraw profits personally. As a result, retaining more capital within the company (where it can be reinvested or used for commercial opportunities) may become a more attractive strategy.

Although investment gains inside a company are still taxable, funds that remain within the business can grow without being immediately diminished by higher personal tax charges.

Please remember that the value of your investments can go down as well as up, and you may get back less than you put in.

ISA updates and the implications for savings

The Budget also redefined how savers can use their ISA allowance. While the total £20,000 annual limit remains unchanged, from April 2027:

• Savers under 65 will be restricted to £12,000 in a cash ISA.
• The remaining £8,000 can be placed in other forms of ISA – typically stocks and shares ISAs.
• Individuals aged 65 and over will continue to have access to a full £20,000 cash ISA allowance.

For dentists who have relied on cash ISAs as a low-risk home for practice contingency funds, future tax liabilities or planned equipment purchases, the new rules may prompt a rethink.

Combined with the rising taxes on investment and rental income, this could be a timely moment to reassess savings strategies and consider whether a more diversified, investment-based approach could offer long-term protection and efficiency.

Specialist guidance tailored to dental professionals

The financial landscape for dentists is becoming increasingly complex, and keeping ahead of these changes is essential. At Wesleyan Financial Services, our dental specialists can help you evaluate how these Budget measures affect both your personal finances and your practice, ensuring your plans remain robust over the coming years.

To get in touch with a Specialist Financial Adviser, simply book an appointment today. Charges may apply.