Covid-19: The impact on the dental market

We are in unprecedented and challenging times at the moment and you are no doubt all anxious about the impact that Covid-19 will have on dental practices. Advice and guidance is being issued and updated on a daily basis.

We at Hempsons are keeping a very close eye on developments as they unfold and we have set out some of the key issues for dental practices that have arisen over the last few days.  We will continue to provide regular updates during these challenging times.

One of the big headliners this week is the updated guidance from NHSE in relation to how NHS dental practices should be operating and the financial support on offer from NHSE.

NHS England Advice

The long-awaited NHS guidance for dental practices was published on 25th March 2020.

Practices have already ceased providing routine and non-urgent appointments and the NHS guidance re-iterates that this should be the case.   It also provides that practices should be establishing remote urgent care services and that local urgent dental care systems will also need to be put in place.

The key question for those of you with NHS practices, relates to your 2019/20 activity targets.  The guidance confirms that for this financial year, March 2020 data will be disregarded.  Contract delivery will therefore be based on March 2019 – February 2020 actuals (i.e. using March 2019’s data rather than March 2020’s data).  Under and over performance will then apply as normal for contracts delivering above and below the 96% threshold.

It has also been confirmed that monthly payments will continue at 1/12th of the current annual contract value.

However, what will happen next year (20/21)? It is reassuring that monthly payments will still continue and that discussions are ongoing in relation to the contract value and 2020/21 reconciliation.  It is not, however, clear how the annual contract value will be determined for 20/21, nor is it clear what the reconciliation arrangements for 20/21 will be i.e. should practices still be expecting clawbacks if they cannot (inevitably) meet their contract targets?  We hope that more guidance on this will be forthcoming very soon.

Other noteworthy items:


NHSE’s guidance provides reassurance for NHS practices in relation to maintaining staffing levels – as contractual payments will continue allowing NHS staff to continue to be paid.  The payments, however, are subject to practices supporting the wider NHS Covid-19 response and making NHS employees available for redeployment.  Contact details of relevant staff should be given to the NHS and practices should support national and local calls for help.  Please do check with your employees before sharing their details.

For practices that cannot benefit from the NHS payments, they may be able to take advantage of the job retention scheme.  This is where the government will pay 80% of an employee’s salary (up to £2,500 per month) plus associated employer NICs and pension costs for 3 months – where the employee is furloughed.  “Furloughed” is where an employee has been asked to stop working but is kept on the practice payroll, the aim being to reduce redundancies.  This raises a number of issues, in particular, how to furlough staff but still provide some urgent care.  More recent guidance issued HERE suggests that where employers receive public funding for staff costs, it is not expected for their staff to be furloughed.  This seems to be because they are likely to still be providing services or support in relation to Covid-19.  Clarity is still required where mixed dental practices are concerned; with staff working across both the NHS and the private side of the practice, and public funding therefore not covering all staff costs.

Self-Employed Income Support Scheme

Akin to the position for employees, the government will also provide cash grants equal to 80% of the average profits earned by a self-employed person from the tax years 16/17, 17/18 and 18/19 – up to £2,500 per month for 3 months. This is only available for those with trading profits of less than £50,000 per year.  It is also only for those whose self-employed income is more than 50% of their income. You will be contacted by HMRC if you are eligible for this. Although this support is a positive move forward for the self-employed from where they were at the beginning of the week, it still leaves gaps for some principals and associates who do not fit within these thresholds.

Business Interruption Loan

This government scheme allows businesses (including dental practices) to apply for loans which will be interest free for 12 months. This is being offered by a number of accredited lenders, including all the major banks.  Loans can be up to £5m and the government is providing lenders with a guarantee of 80% on each loan.  However, note that a number of banks have come under scrutiny in recent days for requesting personal guarantees from business owners in connection with these loans, thus pushing more risk onto individual principals and shareholders/directors of corporates operating dental practices.

Tax deferrals

  • Income Tax – There is an automatic deferral of 31 July 2020 income tax until 31 January 2021.  This is optional.  No applications are required but no penalties or interest will be charged if payment is deferred until January 2021.
  • VAT is deferred until 30 June 2020.  Again, no applications are required but if you normally pay by direct debit, then this will need to be cancelled so that VAT is not automatically collected by HMRC on receipt of your VAT return.

You may additionally be able to receive support through the HMRC time to pay service. These arrangements are agreed with HMRC on a case by case basis. HMRC has a dedicated helpline for this service.


For any personal mortgages, you may be able to obtain a 3 month repayment holiday.

In relation to any commercial leases, if you cannot pay your rent, you will be protected from eviction.  This currently applies up to 30 June 2020 but may be extended if needed. It is not clear whether the term “rent” is intended to include the principal rent alone or perhaps also extends to non-payment of other sums, often reserved as rent, such as insurance costs and service charges.  Hopefully the Government will provide further guidance on this point.  Please note, however, that this not a rent holiday and the liability for rent will still remain.

As we have said, this is a very uncertain and unprecedented time and we want to support you as much as we can.  If you have any legal questions about the impact of Covid-19 on your practice, then please do get in touch.