Owner-Managed Businesses

Doctors and dentists ― employment related expenses

Produced by Tolley
  • 17 Nov 2021 13:51

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Doctors and dentists ― employment related expenses
  • Wholly, exclusively and necessarily
  • Training and professional costs
  • Travelling expenses
  • Equipment and clothing
  • Telephone expenses

Wholly, exclusively and necessarily

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”

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.

Training and professional costs

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

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information


Popular Articles

Bare trusts ― income tax and CGT

This guidance note explains how trustees of bare trusts are treated for income tax and capital gains purposes. Although a bare trust is, in equity, a type of trust, for both income tax and capital gains tax purposes its existence is transparent. This means that no tax liability falls on the trustees

27 Oct 2021 19:01 | Produced by Tolley Read more Read more

Repayment of tax ― individuals

If the self assessment tax return shows that a repayment is due, the taxpayer can claim a repayment or leave it as a credit on their statement of account.The quickest and safest method is for HMRC to make the payment direct to the taxpayer’s bank or building society account and so they are asked to

28 Oct 2021 08:30 | Produced by Tolley Read more Read more

Loan notes and qualifying corporate bonds (QCBs) and non-QCBs

On the disposal of the shares in a company, a seller may receive loan stock in the acquiring company as consideration or part consideration for the sale. For tax purposes, loan notes are either qualifying corporate bonds (QCBs) or non-QCBs (NQCBs). The expression ‘corporate bond’ is a general

21 Dec 2021 16:32 | Produced by Tolley Read more Read more