How dentists can get tax year-end ready

Introduction

As the end of the tax year approaches, there are some valuable opportunities to review your finances and make sure you’re making full use of the allowances and reliefs available to you.

With further tax changes on the horizon, proactive planning can make a real difference to both short-term cash flow and long-term financial security.

Here, we explore some key areas that dentists may want to consider before the 2025/26 tax year closes.

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

Reviewing pension contributions

Pensions remain one of the most tax-efficient ways to save for the future, and for many dentists, they’re central to year-end planning.

The current annual allowance stands at £60,000 or 100% of UK relevant earnings (whichever is lower). If you’re in a position to increase contributions, using as much of this allowance as possible can help reduce your tax bill while building long-term wealth. What’s more, unused allowance from the previous three tax years may be carried forward, potentially allowing for larger one-off contributions.

For dentists paying into defined contribution pensions, such as personal pensions, the process is relatively straightforward. Contributions benefit from government tax relief, meaning a £10,000 personal contribution becomes £12,500 in your pension one basic rate relief is applied.

However, pension planning becomes more complex for those in defined benefit schemes like the NHS Pension Scheme. In this case, it’s not the amount you personally contribute that counts towards the annual allowance, but a calculated figure based on the growth in value of your pension benefits over the year. This calculation is actuarial (in other words, what is likely to happen) and can be difficult to estimate without specialist support.

Given this complexity, many dentists find it helpful to seek guidance from a financial adviser who understands the nuances of dental incomes and pension structures.

Making the most of ISA allowances

Individual Savings Accounts (ISAs) are another cornerstone of tax-efficient planning. Each individual has an annual ISA allowance of £20,000, which can be split across cash ISAs, stocks and shares ISAs and innovative finance ISAs.

Unlike pensions, ISA allowances cannot be carried forward. If you do not use your allowance within the tax year, it’s lost. As a result, ISAs often form a “use it or lose it” element of financial planning.

Looking ahead, the overall ISA allowance is set to remain at £20,000. But from April 2027, cash ISA contributions will be limited to £12,000 for those under 65, with the remaining £8,000 reserved for investing in other types of ISA (such as stocks and shares). This change reinforces the importance of early planning and understanding how different types of ISA fit into your wider financial strategy.

If you have a spouse or partner, they have their own £20,000 ISA allowance, meaning a household could potentially shelter £40,000 from tax each year. Parents and grandparents may also want to consider junior ISAs, which allow up to £9,000 per child annually outside of the adult ISA allowance.

The value of investments can go down as well as up, and you may get back less than you invest.

Thinking about gifting and charitable giving

Gift giving can play a role in both estate and tax planning. Each individual can gift up to £3,000 per year without the amount forming part of their estate for inheritance tax purposes, and any unused allowance from the previous tax year can be carried forward.

For higher-earning dentists, charitable donations may also be worth considering. Gift Aid donations can reduce your taxable income, which may help keep earnings below key thresholds. This includes the £125,140 additional rate tax band for 2025/26, as well as the £100,000 income level at which the personal allowance begins to taper away.

Used strategically, charitable giving can support causes you care about while improving overall tax efficiency.

Please note the Financial Conduct Authority (FCA) does not regulate Inheritance Tax planning and trusts.

Reviewing dividend strategies for practice owners

Dentists who operate through a limited company often have flexibility in how they extract income. Dividends can be an efficient alternative to salary, with the first £500 of dividend income currently tax-free.

Dividend income is not subject to national insurance contributions, which can make it attractive from a planning perspective. However, dividend tax rates are set to rise by 2% from April 2026, meaning this area may require closer attention in the short term.

In some cases, company profits can also be diverted into a personal pension, reducing corporation tax while building retirement savings. The suitability of this approach will depend on individual circumstances and should be reviewed alongside wider income and retirement planning.

Using your Capital Gains Tax allowance

If you're planning to sell assets (for example, shares, investments or even your practice), Capital Gains Tax (CGT) is another area to factor into year-end decisions.

The CGT annual exemption currently stands at £3,000 and, like ISA allowances, it cannot be carried forward. Timing the sale of assets across tax years, or between spouses, can sometimes help maximise the use of available allowances and reduce the overall tax payable.

As always, CGT planning should be undertaken carefully, particularly where business assets are involved.

Staying one step ahead

Recent and upcoming policy changes announced as part of the 2025 Autumn Budget mean dentists face increasing financial pressure in the years ahead – from ISA rule changes to higher dividend tax rates and a proposed ‘mansion tax’ from 2028.

For many dentists, working with a financial adviser who understands their profession can provide clarity, confidence and peace of mind, helping ensure no opportunities are missed as the tax year draws to a close.

To speak to a dental Specialist Financial Adviser about your individual circumstances, simply book an appointment today. Advice charges may apply.