Claiming 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 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
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