expenses for tax relief
I have just joined a practice as a partner,
and I understand that now I am self-employed there are a
lot more expenses I can claim to reduce my tax liabilities.
What expenses can I now claim?
Unlike employed GP’s who must show that
expenses are necessarily for business purposes, self-employed
GP’s are able to claim expenses, which are only wholly
and exclusively for business purposes.
The main expenses, which you can claim, are
Motor expenses – You can claim a percentage
of all expenses relating to running a car, these include
petrol, insurance, road tax, servicing, repairs and cleaning.
If your car has been purchased on hire purchase or you have
a loan, then a percentage of the interest can also be claimed.
The percentage of the expenses you claim must be for the
business use element of the car. Remember you cannot claim
for a direct journey from home to the surgery and back again.
Only journeys to patients homes, hospitals and other work
related places can be claimed.
You can also claim an amount for the wear
and tear of the vehicle, this is know as capital allowances.
This is calculated based on 25% reducing value of the car
or if over £12,000 then the capital allowances are
restricted to £3,000p.a until the value of the car
falls below £12,000.
Professional use of home – this expense is always
claimed as the majority of GPs will do some work at home.
There are various ways to claim, some accountants use a
fixed amount per week, others calculate it specifically
using a percentage of the running costs of your home. Many
GP’s think that if they do claim, there is a capital
gains implication when they sell the house. This will not
be the case as long as the room is not used exclusively
Home telephone – this must be restricted
for personal use.
Mobile telephone – a high percentage
is often claimed, but should be restricted for personal
Computer expenses (including internet access)
– most of you will now have a computer in your home
with connection to the internet and email. Again, there
will be a personal use element, particularly if your children
are using the computer more than you are!
Medical subscriptions – As long as these
are medically related, these can all be claimed in full.
Courses and conferences (including travel
and accommodation) – these can all be claimed in full,
as long as, you do not tack a holiday or sightseeing onto
the end of the trip. This will then mean the whole amount
should be disallowed.
Drugs and instruments – clearly completely
medically related so all claimable. Do not forget those
items you buy in cash at the local chemist to replenish
your medical bag. Don’t forget the medical bag itself!
Medical books, journals or videos, postage and stationery
– these should be claimed according to expenditure.
Dry cleaning – you cannot claim for
the cost of your clothes at all. However, as you may get
blood or sick on your clothes you can claim for dry cleaning.
Do keep your receipts though.
Locum, deputising or locum costs not already
accounted for in your practice accounts – this will
affect you if you have been sick or on maternity leave.
Ensure that you understand how the practice accountant has
dealt with this cost in the practice accounts, to make sure
it is not claimed twice!
Locum insurance – Unfortunately, if
you have a combined policy with permanent health insurance
(income protection), nothing can be claimed.
Spouse’s salary– this can still
be claimed but only in certain circumstances. Firstly, your
spouse must be helping you with your work and you must pay
them the salary, preferably, monthly. It is recommended
that you have a job description, indicating the type of
work and number of hours worked a week. The pay should be
realistic for the work done. It is always an area that Inspectors
like to look at, so be warned and set it up correctly.
Anything else that you have purchased specifically
or partly for work.
It may be tedious, but it is for your own
benefit to compile your expenses as quickly after the year
end as possible and as completely and accurately as possible.
Your accountant cannot be expected to know how many medical
books you have bought during the year or how often you take
your suits to the dry cleaners. It should also be emphasised
that you must by law keep all invoices relating to any claim
for tax purposes for the minimum of six years. However,
if receipts have been lost reasonable claims can be made,
but these may actually be less than the amount spent.
One of the simplest ways of keeping some of
your records, particularly motor expenses, is to have a
separate credit card. The Inland Revenue will accept these
as evidence and this will at least mean you don’t
need to keep all those petrol slips, some of which you may
lose anyway! You should try to use your credit card for
as many business related items as possible.