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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 his 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 immediately after graduation where junior doctors in foundation years one and two undergo supervision and assessment. They must pass their assessments in order to work and practice as a doctor in the UK.
Where such doctors, or other practitioners who are subject to assessment during
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