Dental practices have been contending with a significant increase in costs, according to the tax returns of dentists in the year ending March 2012.

The annual benchmarking statistics just issued by NASDAL (the National Association of Specialist Dental Accountants and Lawyers) show that the total average costs of running a dental practice equated to 67.6% of practice income. As a result, profits are almost back to the levels in the 2004-2005 NASDAL survey.

While fee income has risen on average by £21,000 in NHS practices included in the survey, profit is down. In the private sector, fee income is down and profits are static. Larger practices, with associates, have seen the greatest reduction in profit.

NASDAL's statistics also show that the average net profit for a typical dental practice in 2010/2011 was £125,000 and by the end of March 2012 it was down to £122,000, and an NHS principal's net profit is down by nearly 3% to £130,000 while a private practice principal's net profit is static at £117,000.

Overall, NHS practices continue to earn greater profit than private practices, although the gap has narrowed in recent years.

NASDAL's statistics reflect the fee income of practices with up to 80% NHS commitment while a private practice is deemed to have up to 80% of its income derived from private fees.

Pensions guidance

The pensionable earnings of at least 3,000 performers have been substantially understated since the introduction of the new contract in 2006.

According to David Paul, a specialist chartered accountant, when the new dental contract was introduced, it became the responsibility of principals to fill in an annual reconciliation report (ARR), a statutory form which details the pensionable earnings of every dentist at the practice, and the majority of these forms were not filled in accurately.

In December 2012 new guidance was published by the Pensions Agency on its website after collaboration between NASDAL, the British Dental Association, the Pensions Agency and NHS Business Services. The guidance can be viewed at the following link, chapter 8: http://www.nhsbsa.nhs.uk/Documents/Pensions/GDP_Pensions_Guide_(V2)_12.2012.pdf.