Can dentists reclaim VAT?

Mar 26, 2024

So, you’re a dentist, keeping your clients’ pearly whites shining and bright. But when it comes to the less glamorous side of running your practice, like taxes, it can feel like a root canal without anaesthesia.

One question that we often get asked is whether dentists can reclaim VAT. Let’s go over that so you can focus on your clients and business with one less thing to be wondering about.


Understanding the basics: what’s VAT all about?

First things first, let’s brush up on our VAT knowledge. VAT, which stands for value-added tax, is a consumption tax levied on goods and services. The standard rate is 20%, covering most goods and services. The reduced rate is 5%.

For these sales, you need to charge VAT and pay it back to HMRC in your VAT return – you’re kind of like their tax collector in that sense.

However, not everything that is sold is subject to VAT. Some goods and services are zero-rated, meaning there is no charge but you still need to include them in a VAT return. The rest are exempt from VAT charges and reporting requirements.

Fortunately for you, many dental services fall under the medical umbrella, making them VAT-exempt. But before you click on this page thinking you have your answer, hold on – there’s more that you should know.

Be aware of purely cosmetic services, however, which HMRC considers on a case-by-case basis. These can still be exempt if they’ve been supplied as part of a healthcare treatment programme by a registered health professional, though.


Who needs to register for VAT?

Not all businesses need to worry about VAT – only those registered do. Businesses are required to register when they make an annual turnover of £90,000 or more.

That might mean you don’t have to worry about registering for quite some time, but it could be beneficial to your business if you do – because if you do, you can reclaim VAT that you’ve paid on certain purchases.


Reclaiming VAT

Generally speaking, business expenses that you pay for will have a VAT charge associated with them, a charge that you can reclaim if you’re VAT-registered.

However, because dental services and goods are VAT-exempt, you won’t be able to reclaim VAT on any dental equipment. Services and products that don’t form part of your dental programme may be able to be reclaimed, though.


How much can you reclaim?

Reclaiming VAT can be a complex process and is generally best left to a professional. However, here’s the general idea:

  • Keep detailed records: Proper record-keeping is an essential part of reclaiming VAT as it allows you to work out how much you can reclaim.
  • Determine eligible expenses: Not all business expenses are eligible for VAT reclaims, so make sure to review each expense to ensure it meets the criteria for reclamation.
  • Complete your VAT return: VAT returns are usually submitted quarterly, so make sure you stay up to date with your deadlines.
  • Submit your claim: Once you’ve submitted your return to HMRC, your claim will be processed and you should get a refund.


The importance of a VAT accountant

VAT is no joke. Hopefully, we’ve helped you understand the tax a little bit more, but we would be wrong if we said it was easy. Therefore, our number one piece of advice to you is to think about working with an accountant who can help you.

They’ll help you keep meticulous records, get your VAT returns completed, and reclaim VAT for you – all while ensuring that everything is accurate and on time.

JTP could be that accountant for you. If you want to learn more, don’t hesitate to get in touch.

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