The Autumn Budget 2025 introduced a range of tax and financial changes that will impact dental practices and professionals. Here are the 8 key points you need to know – plus practical action tips to help you stay ahead.
1. Electric Car Allowance Extended
The 100% First Year Allowance for zero-emission cars has been extended until April 2027. It was due to finish in 2026.
Why it matters:
- Dentists with a company can claim the full cost of an electric car and charging equipment against taxable profits.
Action:
- We say every year that this generous allowance will end, but it keeps going for another year.
- Speak to your accountant about buying an electric car before April 2027.
2. New Mileage Charge for Electric Cars
From April 2026, electric vehicles will incur a 3p per mile charge for business mileage reimbursement. It’s 15p for hybrids!
Why it matters:
- This is a new cost for using electric cars for journeys and could rise in future years.
- It will affect high-mileage drivers the most
Action Points:
- Factor this into cost planning for the electric car purchase and use.
3. Dividend Tax Rates Increase
All dividend tax rates (and the directors’ loan tax rate) are rising by 2% from April 2026.
Action Point:
- Review your salary vs dividend split with your accountant before April 2026.
- Consider bringing forward any dividend payments to take advantage of lower rates before the rise.
- Review with an accountant if the company is still the best structure; could similar tax results be obtained as a sole trader?
4. Income Tax on Property & Savings Up
From 2027, all tax rates on property and savings income increase by 2%.
Action Points:
- Talk with your financial adviser and consider moving savings into a tax-free ISA account strategy early.
- Consider the effect of the tax rise on property income and adjust rents as required.
5. ISA Limit Changes
From 2027, the ISA cash limit for under-65s will reduce from £20,000 to £12,000.
Why it matters: This reduces the amount you can save tax-free each year.
Action Points:
- Review strategy: If you’re under 65, adjust your long-term savings plan to maintain tax efficiency.
- Maximise contributions now: Use the current £20,000 allowance before the limit drops.
- Plan: Consider alternative tax-efficient savings options such as pensions or investment bonds.
6. Personal Allowance Frozen
The personal allowance and tax bands for income tax and national insurance remain frozen until 2031, meaning more income will be taxed and taxed at higher rates over time.
Action Points:
- Factor this into long-term financial planning and tax payments.
- Consider the need to pass on rising tax and inflation costs to maintain living standards
7. National Living Wage Increase
From 2026, the rate rises to £12.71/hr, up 5%
Action Points for Practice Owners:
- Practice owners update payroll for workers paid on or close to minimum wage and prepare for higher staff costs.
8. Salary Sacrifice Pension NIC Relief Capped
From April 2029, National Insurance relief on salary sacrifice pension contributions will be capped at £2,000 per employee.
Action Points for Practice Owners:
- Consider implementing a salary sacrifice before the new rules come into effect
- Communicate changes early so team members can plan contributions before the change.
- Review existing salary sacrifice arrangements for staff and adjust as necessary.
In Summary
The Autumn Budget 2025 brings changes that will affect dentists’ finances. From extended electric car allowances and new mileage charges to ISA limit reductions and rising dividend tax rates, these updates require proactive planning.
