Doctors and dentists ― self-employed expenses

Produced by Tolley

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

  • Doctors and dentists ― self-employed expenses
  • Practice expenses
  • Expense claims
  • Personal expenses
  • Property expenses ― use of home
  • Travelling costs
  • Capital allowances
  • Employee costs

Doctors and dentists ― self-employed expenses

Practice expenses

Most GPs have adopted the practice of making annual claims for income tax purposes in respect of amounts paid out privately in connection with their practice. Typical expenditure of this nature includes:

  1. medical subscriptions

  2. motor car and travelling expenses

  3. personal telephone charges, and

  4. salaries and benefits paid to spouses

Where a doctor or dentist is a sole practitioner, such disbursements are normally charged in the practice account. They are expenses incurred wholly and exclusively in connection with their profession and are allowable. They are treated as any other expense of the business.

In the case of a medical or dental partnership, it is necessary to establish which expenditure should be paid out of partnership funds and which are to be borne personally by the practitioner. In ideal circumstances, this will be set out in the partnership deed. Often the deed is silent and the position should be confirmed in writing.

In these circumstances, the partnership accounts do not reflect the full costs of the partners. It is important that the practitioner receives the relief due on such expenditure. This is usually achieved by the submission of a practice expenses claim which is deducted from their share of the partnership profits.

Expense claims

Expense claims should be drawn up to the same accounting year end as the partnership accounts and it should include all items paid personally by the partner concerned.

The claims must be taken into account when calculating the partner’s taxable profits on the partnership return. A separate claim is not permissible, although prior to self-assessment this was the most common way of dealing with such expenses.

Therefore, if an amendment is required, it must be made on the partnership return, in addition to the individual partner’s return. The process for completing a GP’s return may therefore look like this:

It may often be the case that the individual partners in the practice do not use the same accountants, so it is possible to only

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