By Simon Misiewicz
Article relevant to the tax year 2018/19
Are you self employed and / or have private work as a medic or doctor?
Are you looking for ways to reduce your tax bill whilst building your wealth?
Our team of medical professional accountants are focused on creating greater revenues for your medical professional business such as GPs, locums and dentists, whilst being tax efficient.
We wanted to provide all medics and doctors with a concise list of expenses that may be claimed against your medical income as a doctor.
Travel costs TTOIA 2005, BIM47701, BIM35660
Mileage may be claimed at a rate of 45p per mile for 10,000 miles and then 25p thereafter. You will need to keep a detailed log of your travel habits to ensure that you have evidence of your claim. Please remember that you will also be allowed to add an extra 5p per person. So, if you have three other doctors in the car you could claim 60p per mile. The type of travel allowed is as follows:
- To and from private patients;
- To and from training courses that enhance your knowledge;
- Networking and exhibition events.
Travel costs to your usual place of work will not be allowed. As we identified in the Samadian v RCC case – Disallowed costs for doctors working with the NHS, as seen in our previous article
Medical subscriptions & memberships
Any costs associated with publications, membership and attendance of events relating to your medical profession will be allowed.
Personal telephone charges
The full cost of mobile phones may be claimed against your business. There are no benefit in kind charges for personal use, so all of these costs may be used to offset against your medical income.
Use of home EIM32815, ITTOIA 2005, s 94H, BIM47825
If you use your home as an office or part of your home for patients you can claim a minimum of £4 per week. I appreciate that this is not an exciting amount, bearing in mind that you can only claim the costs of £208 per year, alternatively you can claim a rate based on the number of hours that you work, as shown below:
A claiming of £216 for use of home on the basis of working an estimated 52 hours a week at home should only have to worry about HMRC challenging £96 of this estimate (i.e. the yearly difference between claims based on working, say, 25 hours or 52 hours per week).
Even if you do not work more than 51 hours on average, you may be able to justify this cost on an actual basis, or at least a cost greater than £120. Looking at this from HMRC’s perspective, the potential benefit in examining the details closely is small so the likelihood of doing so is greatly reduced.
Salaries and benefits paid to spouses
You can pay a spouse or family member that supports you with your medical business activities. We suggest that you pay them through a payroll system that informs HMRC of their employment status. Care must be taken if they already have employment elsewhere as they will pay emergency tax.
The type of activities that can be paid for are:
- Telephone answering;
- Chauffeuring (50p per mile for two people);
- Practice administration;
- Medical advice or services, where qualified.
Please remember that if they are paid £5,824 and have no other form of employment income, they will not pay any national insurance or income tax.
Capital allowances claims on medical equipment
Where an allowance has been claimed for use of home, no capital allowances should be claimed in respect of fixtures and fittings. Items of technical equipment not fixed to the property will be eligible for capital allowances.
Where improvement grants have been provided by the PCT, capital allowances may not be claimed on either the element subsidised or the element paid by the practice. The subsidy element is not allowable as the expenditure has not been incurred by the practitioner.
Please note that any replacement costs of equipment may also be claimed for against your taxable income.
We wrote a previous article that talked at length about the tax breaks that both employees and employers have when pension contributions are made. Please refer to that article for more information
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