The cut to interest rates and the recent formation of a new Government is likely to foster increased confidence and renewed buyer activity. We discuss what the interest rates cut and potential increase to capital gains tax could mean for buyers and sellers of dental practices in the UK.

Interest rates cut

The decision to cut interest rates follows inflation falling to meet the Bank’s 2% target in May and staying there in June.

However, core inflation remains comparatively high and is expected to rise again in the second half of the year causing a warning to lenders to be careful not to cut interest rates too quickly or by too much.

Maja Thompson, Director of Henry Schein Dental Practice Services said:

“A reduction in interest rates is good news for all of us as consumers, mortgage holders, anybody servicing a debt, but especially for buyers looking to buy a first or next practice. Bank lending rates have already started to come down from the recent highs, and lending appetite is returning. Any reduction in rates is good news for buyers as it makes their purchase, if bank funded, more affordable in the long run.

This is also a good time to reassess financing needs for practice owners as they may have bought or refinanced their practice while rates were high. All in all, it is good news for borrowers, finally!”

Capital Gains Tax (CGT)

For higher earners, capital gains tax is currently 20% on gains from non-residential assets. In 2023, the now Chancellor Rachel Reeves said Labour had no plans to increase capital gains tax; saying the party wanted Britain to be the best place to start and grow a business.

However, new Deputy Prime Minister Angela Raynor is known to have disagreed with the current rate of capital gains tax following the report into the outgoing Prime Minister’s latest tax bill.

The Labour government is looking to bring in revenue-raising measures and has only officially ruled out changes to the following taxes; income tax, national insurance, VAT and corporation tax.

Maja added:

“Like everyone, we’re waiting to hear what is announced at the Budget on 30 October in relation to capital gains tax. If it is increased, depending on the implementation timescales, we’ll be helping our network of sellers manage their sale quickly and efficiently. It is important to be prepared so if you are on the fence about selling, and are within 10 years of retirement, it is important you discuss your options with your broker. This one decision could save you thousands of pounds.

“In the recent years Business Asset Disposal Relief (BADR – originally known as Entrepreneurs Relief) has reduced from £10m to £1m, which means that only the first £1m will be taxed at 10% and the rest at current rate of CGT of 20%. It is not currently known whether the new Labour government will be adjusting BADR thresholds, which may compound the tax burden of an asset sale.”

Next steps

If you’re considering selling, discover your practice’s true market value by booking a valuation with one of our experts. If the recent changes have made you think about buying, view our range of practices for sale or register as a buyer and we’ll guide you through every step.

About us

Henry Schein Dental Practice Sales, formerly MediEstates, is proud to be part of the Henry Schein group of companies. Henry Schein’s mission is to help our customers be more successful so that they can focus on delivering the best quality care.  We provide the best quality and value in products and services, helping our customers, as trusted advisors and consultants, to efficiently operate and grow practices and increase financial return and financial security.