The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The income received by a practitioner is commonly a mixture of employment income and income from a profession. The separation of the income streams is crucial to the correct analysis of allowable expenses, as the criteria for the tax deduction of expenses differs crucially for the two income streams.
The basis for an allowable deduction relating to an employment of a doctor comes from ITEPA 2003, s 336. This states that:
“(1) The general rule is that a deduction from earnings is allowed for an amount if -(a) the employee is obliged to incur and pay it as holder of the employment, and(b) the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment”
“(1) The general rule is that a deduction from earnings is allowed for an amount if -
(a) the employee is obliged to incur and pay it as holder of the employment, and
(b) the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment”
The practitioner must be necessarily obliged to incur the expense in their role as an employee. This test does not differ from any other employment, so the treatment of doctors and dentists as regards employment expenses is no different than to any employee.
The restrictive conditions relating to employment expenses give rise to the following issues which are specific to this area.
The expense that an individual incurs to be in a position to hold the employment does not fall within ITEPA 2003, s 336. This is simply because the individual is required to attain the qualifications prior to holding the employment, not as an obligation of the employment.
Therefore, in general, no tax relief is available for training and exam fees prior to employment. Furthermore, expenses in connection with studying, such as providing suitable equipment and environment for studying, will not be allowable.
However, doctors will continue to train and develop their skill sets throughout their career. This commences immedia
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
List of supplies that are exempt from VATThe goods or services that are exempt from VAT are listed under various group headings within VATA 1994, Sch 9.It is important to remember that not all supplies that come within a heading will be exempt from VAT. For example, income from the placing of bets
Why defer a gain?An individual’s net taxable income and chargeable gains for the tax year influence the rate of tax payable on their capital gains. See the Introduction to capital gains tax guidance note.Depending on the nature of the asset disposed of, this can result in the individual paying
OutlineFor income and capital gains tax purposes, partnerships are regarded as being tax transparent ― ie they are not taxed in their own right but instead taxation is applied to the partners.Accordingly, if the partners are individuals, then much the same considerations apply as for an individual
Close companies ― overviewMeaning of close companyThe tax rules for close companies are intended to address those companies that are closely controlled (ie by the owners and their families) and therefore could be used to manipulate the tax position of its activities and its investors. Therefore,
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.