Hi {{firstname|there}},
I started my career at PwC. Then I went to Bank of America as a VP. Then I walked away from all of it to start Samera from my dad's dining table in Wimbledon, a decision my dad was, let's say, not immediately enthusiastic about.
But those years in big finance taught me something that has shaped everything we do at Samera, the people who keep the most of what they earn aren't necessarily the highest earners. They're the ones who are set up correctly.
Structure.
That's the word. And it's the conversation I find myself having, over and over again, with new clients that I cannot believe nobody has had with them before. Dentists earning £150k, £200k, £250k a year, still operating as sole traders. Paying tax at 45p in the pound on a chunk of that income when they absolutely don't have to. It genuinely bothers me every time I see it.
So this month - let's sort it out.
45% - Income Tax rate for sole traders earning above £125,140. Nearly half your income, gone.
25% - Corporation Tax rate, with Full Expensing on equipment available on top of that
£30,000–£40,000 - typical first-year tax saving when we move a dentist to the right Ltd structure
What's the actual difference and why does it matter so much?
As a sole trader, every pound of profit goes through Income Tax. At higher earnings that means 40% and 45% chunks leaving before you've had a chance to think about it, plus Class 4 National Insurance on top. No flexibility. It just goes.
As a limited company, the business pays Corporation Tax on its profits - 25% at the top rate, lower on smaller amounts. You then decide how to take money out: salary, dividends, or a mix of both. You can make pension contributions through the company. You can retain profits and time when you're taxed on them. The difference in real money, year on year, is substantial.
Sole Trader - The Expensive Default:
All profits taxed as Income Tax - up to 45%
Class 4 NI on top of that
No salary/dividend flexibility whatsoever
Personal and business finances intertwined
Simple to run. Costly to earn from.
Limited Company - The Smarter Setup:
25% Corporation Tax on profits
You choose the salary/dividend mix
Retain profits - pay tax when it suits you
Company pension contributions are deductible
Cleaner, clearer, better for a future exit
What the numbers actually look like: A dentist with £220k in net profit as a sole trader typically pays around £87,000 in combined tax and NI. Through a well-structured Ltd- salary, dividends, pension contribution via the company, that effective bill often drops by £30–40k in year one. Nothing exotic about this. It's just the right architecture, used correctly.
What good tax planning actually looks like - beyond just filing returns
There's a difference between an accountant who keeps you compliant and one who helps you keep more of what you've earned. Here's what I expect our team to be doing for every dental client, every year:
Pension contributions through the company - reduce Corporation Tax and no NI. Many people aren’t using their full allowance.
Optimising your salary/dividend split each year - not set-and-forget. It changes every year and needs a yearly review.
Where you hold your practice premises - inside or outside the company can have big tax and inheritance impacts.
Business Asset Disposal Relief - plan early to qualify for 10% CGT instead of 24%. The savings can be significant.
Five questions to take to your accountant this week
Is my current structure still right for my income level and what I'm planning to do next?
Am I extracting income from my business in the most efficient way this tax year?
Am I using my pension Annual Allowance and is the company making employer contributions?
If I sold the practice tomorrow, what would my CGT position actually be?
How many dental practice owners do you currently advise? (The answer matters.)
→ Let's look at your structure together. A quick conversation with our team is all it takes to work out whether you're set up correctly and what it could save you if you're not. samera.co.uk/service/dental-accountants
Speak soon,
Arun
Natasha Gnanapragasam
Accountancy Senior Manager
Book your free consultation with Natasha. During this call, she will explain exactly what the onboarding process is and what working with us will look like on a day-to-day basis.
MEET CHARLES FROM ACCOUNTS AND TAX TEAM
Charles Suthakaran
Internal Accountant
Charles joined Samera in February 2022, specialising in bookkeeping, year-end accounts, company secretarial work, and tax return preparation. He has strong expertise in client management and communication, ensuring accurate financial reporting and compliance, and also manages the internal accounting function. He supports clients and the firm by maintaining smooth financial processes and reliable records. Dedicated and practical, he provides actionable advice that supports informed decision-making and long-term success.
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