Every practice owner knows their turnover. Rather fewer can say what proportion of it leaves as employment cost, whether the fourth surgery earns its rent, or how many chair-hours went unsold last month. Those are the numbers that decide whether a busy practice is also a profitable one, and they are all ratios — which is why they survive comparison between practices and why turnover on its own does not.
This guide sets out the short list worth tracking, shows how each one is built, and uses the rates actually in force for the tax year beginning 6 April 2026 so you can rebuild your own figures the same day you read it.
Staff cost as a percentage of fee income is the ratio that moves the most money in most practices. It is also routinely understated, because owners think in salaries while the practice pays employment costs. The gap between those two numbers is wider than it used to be.
Worked example — illustrative, using 2026/27 rates. A full-time dental nurse paid the National Living Wage of £12.71 an hour (the rate for workers aged 21 and over from 1 April 2026), working 37.5 hours a week across 52 weeks, is paid £24,784.50 gross. On top of that the practice pays:
The nurse costs £28,308.52, not £24,784.50 — an extra 14.2% on top of the headline salary, before recruitment, training, uniforms, CPD or holiday cover. Build your staff ratio from salaries and you will understate your largest cost by roughly an eighth, every month, in the one number you most rely on.
Now put that into a ratio. Take an illustrative practice with fee income of £900,000 and employment costs for nurses, reception, hygiene and management — excluding associates and the principal — of £261,000. That is a staff ratio of 29%. If the ratio drifts to 31% over two years without fee income moving, the practice has lost £18,000 of profit a year. Nothing dramatic happened. One extra part-time nurse, a round of pay rises above what fees absorbed, and a rota that was never re-cut.
The Employment Allowance reduces a practice's employer's National Insurance bill by up to £10,500 a year, and from April 2025 the old £100,000 restriction on employers with larger National Insurance liabilities was removed, so most practices can claim it. Take it, but do not let it hide the trend: the allowance is a fixed cash amount, so as your payroll grows it covers a smaller share of your National Insurance each year. A staff ratio that looks flat after the allowance can be rising underneath it. Track the ratio both ways — gross employment cost, and net of the allowance — and act on the gross one.
Lab fees as a percentage of fee income should track your treatment mix and almost nothing else. If the percentage climbs without the mix changing, only three things can be true: your lab has repriced, your pricing has not kept up, or work is being remade. All three are fixable, and all three are invisible in a profit and loss account read once a year.
Materials behave the same way in miniature. It is a small percentage, which is exactly why sudden movement is such a clean signal — a jump usually means stock control, waste or a supplier change nobody flagged. Track both monthly, as percentages, on the same page as everything else.
A chair-hour that goes unsold is gone. It cannot be stored, discounted later or carried forward, and it costs the same in rent, rates and nursing whether anyone sits in it or not. Utilisation is simply booked hours divided by available hours, calculated per surgery and per weekday rather than as one practice-wide average — the average is what hides the problem.
Worked example — illustrative. Four surgeries, open eight hours a day, five days a week, 46 working weeks a year, gives 7,360 available chair-hours. If 5,888 are booked, utilisation is 80% and 1,472 chair-hours went unsold. Multiply those by your own average gross fee per chair-hour — divide last year's fee income by last year's booked hours to get it — and you have the size of the prize, expressed in money rather than in frustration. Break it down by day and the answer usually turns out to be a specific light morning, in a specific surgery, that a rota change or a targeted recall would fill.
Profit per surgery is practice profit before the principal's own clinical earnings, divided by the number of surgeries in use. It is the only ratio that honestly answers the three questions owners actually ask — should I fit out another surgery, should I bring in another associate, should I open later? — because it tells you what a surgery contributes once it is carrying its share of rent, rates, nursing, reception and management.
One thing to build into that calculation: a dental practice providing exempt dental care cannot reclaim the VAT on a fit-out, so the cash cost of an extra surgery is the VAT-inclusive figure, not the net one. Our VAT guide explains why. It is the single most common reason an expansion appraisal comes out 20% too optimistic.
If you hold an NHS contract in England, delivery against contracted UDAs is a financial ratio, not a compliance one. Deliver below 96% of contracted activity and the commissioner recovers the shortfall; commissioners may allow carry-forward arrangements up to 104% of contracted activity in defined circumstances. Track delivery monthly against a straight-line target, because the practice that discovers a shortfall in February has one quarter to fix a year's problem, and heroic Q4 catch-up is itself a warning sign — to you now, and to a buyer's accountant later.
Contract changes flowing from the NHS dentistry quality and payment reforms are being implemented from April 2026, with contractual and clinical guidance issued to practices and commissioners ahead of that date. Whatever the detail of your own contract variation, the discipline is unchanged: measure delivery every month against where you should be, not against where you finished last year.
NHS, private fee-per-item and plan income behave differently in margin, in risk and in what a buyer will pay for them. Plan income is recurring and sticky; fee-per-item private income is the highest margin and the most volatile; NHS income is the most predictable and the most capped. Track the split as a percentage of fee income each quarter and steer it deliberately, because the mix you drift into is the mix you will eventually be valued on — see how practices are valued.
Practices improve when the review is short and repeated, not long and annual. Do this within the next week and then repeat it every quarter:
Two actions a quarter is eight a year, which is more change than most practices make in three. A ratio is only meaningful against two references — your own trend, and practices of a comparable size and mix — and a dental-only accountant sees enough of the second to tell you which of your numbers is genuinely unusual and which merely looks it.
Deadlines coming up, rule changes that affect dentists, and one number worth checking — once a month, no spam.
There is no single correct figure, because the honest answer depends on your NHS and private mix, how much hygiene and therapy work you delegate, and how much dentistry the principal performs personally. What matters far more is that the ratio is built correctly and watched over time. Include employer's National Insurance at 15% above the £5,000 secondary threshold and the 3% employer pension minimum on qualifying earnings, not just salaries — that adds roughly 14% to a full-time nurse's cost in 2026/27. Then compare your own trend across four quarters, and your position against practices of a comparable size and mix. A creeping ratio is the earliest warning most practices ever get.
A short list beats a dashboard nobody opens. Track six things: employment cost as a percentage of fee income; lab fees and materials as percentages of fee income; chair utilisation calculated per surgery and per weekday; profit per surgery before the principal's clinical earnings; your income mix between NHS, private fee-per-item and plan; and, if you hold an NHS contract in England, UDA delivery against a straight-line monthly target. Review them quarterly against your own trend and against comparable practices, pick the two furthest out of line, and agree one action for each. Twenty minutes, four times a year, beats an annual deep-dive nobody acts on.
Compare the ratios rather than the feeling, because a full book with the wrong ratios is still an underperforming practice. The three that expose most problems are employment cost as a percentage of fee income, chair utilisation by surgery and weekday, and profit per surgery. Underperformance almost always shows up as a slow drift rather than a shock: two points added to the staff ratio on £900,000 of fee income costs £18,000 of profit a year and feels like nothing at the time. If your accountant cannot tell you how your ratios sit against genuinely comparable dental practices, that is the first gap to close.
Start with gross pay, then add employer's National Insurance and the employer pension contribution. For 2026/27, a full-time nurse on the National Living Wage of £12.71 an hour working 37.5 hours a week for 52 weeks is paid £24,784.50. Employer's National Insurance is 15% on pay above the £5,000 secondary threshold, so £2,967.68. Auto-enrolment costs 3% of qualifying earnings — the band between £6,240 and £50,270 — so £556.34. The total employment cost is £28,308.52, which is 14.2% above the salary figure, before recruitment, training, uniforms or cover for holiday and sickness.
It changes your cash National Insurance bill, and it should not change how you read the trend. The allowance reduces employer's National Insurance by up to £10,500 a year, and the previous £100,000 restriction on employers with larger National Insurance liabilities was removed from April 2025, so most practices can claim it. Because it is a fixed cash amount rather than a percentage, it covers a shrinking share of your bill as the payroll grows — which means a net-of-allowance ratio can look flat while the underlying cost is climbing. Track the ratio on gross employment cost, and treat the allowance as a cash saving rather than a cost reduction.
Quarterly for the ratios, monthly for UDA delivery if you hold an NHS contract in England. Quarterly is frequent enough to catch a drift while it is still cheap to correct and infrequent enough that the review actually happens. Monthly UDA tracking is separate and non-negotiable, because under-delivery below 96% of contracted activity is recovered by the commissioner and a shortfall found in February leaves one quarter to fix a full year's problem. Keep the review to one page and two agreed actions. Practices that improve are the ones that look at the same page every quarter, not the ones that commission an annual analysis.
A free, no-obligation conversation about your situation — associate, principal, buying or selling. If we can't add value, we'll say so.
One short email a month: deadlines coming up, rule changes that affect dentists, and one number worth checking in your practice. No spam, unsubscribe any time.