Budget Summary 2026: no cavalry is coming

The Chancellor described Budget 2026 as “breathing space” for families and businesses. For the owner of a smaller dental practice, my reading is simpler: there is no cavalry coming over the hill.

There was no increase in the headline rates of Income Tax, National Insurance or VAT, while Corporation Tax remains at 25%, with the small-profits rate at 19%. Full expensing also survives. Stability is welcome, but standing still after several years of rising payroll, laboratory, material, compliance and finance costs does not feel like a giveaway.

The most immediate issue is people.

From April 2027, the National Living Wage rises by 3.9% to £13.21 an hour. Many dental nurses and front-of-house colleagues already earn more than that, but the effect travels upwards. When the floor rises, experienced team members quite reasonably expect the gap above it to be maintained. Employer National Insurance has not fallen, so practices must budget for wage inflation and the associated on-costs.

The much-trumpeted business-rates support is aimed at retail, hospitality and leisure. A dental practice is unlikely to qualify. The major business-energy scheme is aimed at eligible manufacturers, so most practices should expect little direct help there either.

The wider economy offers no excuse for complacency. The OBR expects growth to slow to 1% in 2027, household consumption to grow by only 0.6%, and inflation to average 3.4%. That combination may make patients more cautious about discretionary treatment at the same time as practice costs continue rising.

Owners with savings or rental property should note that tax rates on savings and property income rise by two points from April 2027.

Then comes the sting for owners planning an exit.

From 6 April 2027, the lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000. The relief rate remains 18%, compared with the main 24% Capital Gains Tax rate. On the affected £500,000 of gain, that can mean an additional £30,000 of tax for each qualifying owner.

There is a new Founders’ Relief offering a 10% rate on qualifying gains, but do not assume that your practice will benefit. The proposed criteria target high-growth companies with turnover of at least £10 million and demanding growth, employment or research conditions. That is a different universe from the owner-managed practice turning over up to £2.5 million.

So, what do we do?

First, ask your accountant to model the Budget against your own company, remuneration and exit plans. If a sale is contemplated, review timing now, without allowing the tax tail to wag the commercial dog.

Second, rebuild the payroll forecast for April and examine productivity by clinician, chair and hour. A pay rise without a productivity plan simply reduces profit.

Third, review fees, patient finance, conversion, diary utilisation and cash reserves. Small quarterly adjustments are usually kinder than one annual shock.

This Budget has not damaged the typical dental practice overnight. Nor has it solved anything fundamental.

The message is clear: margin, cash and eventual value will be protected by better management, not Westminster.