Employment Status of Associate Dentists

As a dentist, you understand the importance of staying up-to-date with the latest information in your field. In this article, written by our colleague, Angela Ferguson from PSTAX, we provide you with an important update on upcoming changes to the treatment of employment status for associate dentists. While not directly related to financial planning, this update is essential for anyone working as an associate dentist. So, read on to learn more about this upcoming change and how it may impact you.

From April 2023, the employment status of associate dentists will need to reviewed by dental practices as HMRC is withdrawing its blanket guidance that associate dentists were self-employed.


Associate dentists are those who work as a dentist, at a dental practice, but it is not owned by the associate dentists. Instead, they usually pay a license fee to the host practice for use of the surgery offices, dental equipment and staff and work under an agreed contract with the dental practice.

For many years, there was an informal agreement with HMRC that associate dentists could be treated as self-employed. The HMRC agreement was based on there being a standard contract for associate dentists, which had been approved by the British Dental Association (BDA) and the Dental Practitioners Association (DPA). 

Unfortunately, from 6 April 2023, HMRC has decided to remove the existing current concession that treats associate dentists as self-employed. Instead, dental practises will have to use the usual status tests for employment to determine whether they are employed or self-employed, or where they operate under their own Limited company, whether the off payroll working rules (IR35) apply.

Action needed before 6 April 2023

As a matter of urgency, dental practises need to review the contracts for any of the dentists practising as an associate in the dental practice. The terms and conditions set out in the contracts should assist in establishing if the associate dentists are indeed self-employed and so the payments received could be assessable to tax under Self Assessment, or Corporation Tax Self Assessment where a limited company is in place.

Alternatively, if after considering the employment status tests (see below), the practice may conclude that the associate dentist is actually employed/inside the IR35 rules, the payments made by the practice is therefore employment income and so must be paid via the payroll with appropriate tax/NIC deductions.

Additional Costs

Apart from the costs associated with reviewing the employment status of the associate dentists and seeking professional tax assistance, if the dental practice is found liable for the tax/NIC for the associate dentists, the practice will have to pay the underpaid income tax and NIC, plus apprenticeship levy where relevant and interest and penalties.  

HMRC hasn’t stated whether there will be an amnesty on historical cases where it determines that the associate dentist was an employee of the practice. If not, HMRC normally can go back four years for tax and six years for NIC, although the tax/NIC already paid by the associate dentists who operate as self employed sole traders may be offset against the tax/NIC liability, but the dental practice would still be liable for at least the employer’s NICs.  Please note there is no similar offset where the associate dentist operates via their own limited company.

In addition if the associate dentists are employees, the practice will also need to factor in the wider employment rights such as pension costs, holiday pay, benefits provided to staff, plus statutory payments and annual leave entitlements. 

Employment Status Tests

These tests need to be considered in general and although some will be more significant than others, they need to be looked in conjunction with all of the tests together to ascertain the overall picture.

a) Substitutes and helpers – Is the associate dentist required to do the work themselves? If there is an unrestricted and genuine right for the individual to send a substitute in their place – and the dental practice obliged to accept that substitute in all cases – then it is unlikely that the individual is an employee. If so, does the worker personally pay the substitute he or she provides? If both these conditions apply, then the engagement would not constitute ‘personal service’ and the individual cannot be treated as an employee.

Please note that that this is a very difficult test to meet in most cases and, where it is argued that there is a right of substitution, it is likely that this will be scrutinised closely by HMRC and challenged.

b) Working arrangements (control) – How much control is exercised by the practice in terms of how, where, when the work is done and what work is done? This includes areas such as the right (or otherwise) of the practice to move the associate dentist to a different job, controlling where the work is done, setting deadlines and the overall level of supervision.

c) Worker’s financial risk – This is essentially measuring the level of financial risk to the individual, i.e. are they genuinely in business on their own account and can they make a profit or a loss from their business? Without genuine financial risk, self-employment can be difficult to demonstrate.

This will include whether they provide their own significant equipment/materials and whether they must rectify any mistakes at their own expense. In the latter case, this would refer to situations where the individual incurs an expense in rectifying the mistake and would not apply just because the individual loses the opportunity to provide services elsewhere.

d) Worker’s involvement (integration) – How integrated is the worker into the practice? This considers areas such as whether they have any line management responsibilities for other dental practice staff or whether they work alongside other workers doing essentially the same sort of work, but on an employed basis. If the answer is yes, to any of these it is an indicator of employment not self-employment.

Care must be taken where individuals are engaged for longer periods of time or for a series of engagements since this may change their status within the organisation.

e) Worker’s contracts (Mutuality of obligation) – If an individual is an employee, the employer is obliged to provide work and the employee to do the work. The employer is still legally obliged to pay the employee even when there is no work available. This does not apply to the self-employed.

Is the practice obliged to provide the worker with work? If not, that generally indicates self-employment, although a person on a zero-hours contract may still be an employee.

It should be noted that mutuality of obligation can be inferred after a certain period of time in cases where a worker has continued to provide services in the way first envisaged and their contract has rolled on indefinitely.

f) Payment terms – Where a person is paid a fixed amount for undertaking a specific task, regardless of how long it takes, this is more likely to indicate self-employment. Where a person is paid an hourly, weekly, or monthly rate, this is more likely to indicate employment.

HMRC’s Digital Test for Employment Status

HMRC has a digital tool ‘Check Employment Status for Tax (CEST)’ to establish whether the associate dentist is employed or self-employed.  Unfortunately, the tool is not brilliant in making an assessment where the case is borderline and often returns an ‘unable to determine’ outcome.  The practice is then to either seek professional advice or make a decision based on the information available.


Establishing the employment status of an associate dentist will be based on the contractual terms and conditions and working arrangements that exist day to day.  Dental practices will need to review the status of their associate dentists NOW following HMRC’s withdrawal of the concession from 6 April 2023 where it assumed that associate dentists were self-employed.  Professional tax advice will need to be taken where there are cases that are not clear cut.  Similarly for historical employment cases. In addition, practices will need to consider pensions, legal issues and staff benefit provisions for any new staff members.

Article written by Angela Ferguson Director and Head of Employment Taxes at PSTAX

Angela Ferguson (ATT Fellow)

Director and Head of Employment Taxes


Tel: 07827 255122

The Financial Conduct Authority do not regulate tax planning.

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