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Claiming expenses for tax relief

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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 as follows:

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 for work

Home telephone – this must be restricted for personal use.

Mobile telephone – a high percentage is often claimed, but should be restricted for personal use.

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.

Recording Keeping

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.

October 2005