Self employed Associate
Most dentists in the United Kingdom work as self-employed associates. This means that they need to be registered with the Inland Revenue and pay the tax themselves. This is a much more tax efficient way than being employed on PAYE (Pay As You Earn) basis. People employed on PAYE basis have their tax and National Insurance contributions deducted by the employer. Self-employed dentists are paid a gross amount of money and it is their responsibility to pay the relevant tax and insurance to the Inland Revenue.
Registration with HM Revenue & Customs.
As a self-employed dentist (which normally includes associates) you should register as soon as possible with HM Revenue & Customs. Registration is straightforward and can be done over the phone (0845 9154515), on-line or by post. You will need to have your National Insurance number to hand: if you don’t have one because you have recently moved to the UK, you should contact Jobcentre Plus on 0845 6000643.
As there is no need to pay tax or to prepare accounts immediately, it is very easy to think that this can be dealt with later, however it is then easy to let it slip to the point where you become liable for penalties for late registration of up to the amount of any tax due as a result of late registration. At the latest, registration should be done by the 5 October following the end of the tax year (which runs from 6 April to 5 April) in which you start in business. Thus, if you start on 1 January 2011, you need to register by 5 October 2011 at the latest.
Once you have registered as self-employed, you will fall into the “Self-Assessment” tax system and be required to complete a tax return each year. The return will normally be issued in April and requires information on your income and gains for the year to 5 April just ended. If you are preparing your own return, you can complete a paper return and must do this by 30 September following the tax year-end if you want HMRC to calculate the tax for you. If you complete your return on line you have until 31 January following the tax year end to file your return.
Standard dental services are VAT exempt therefore you do not normally have to register for VAT.