Tax-deductible expenses for medical professionals against self-employment or partnership income

Navigating the intricacies of tax regulations can be a daunting task, especially for self-employed medical professionals in the UK. Understanding what qualifies as a tax-deductible expense is crucial for optimising your financial health and ensuring compliance with HM Revenue & Customs (HMRC).

This blog explains the criteria for tax-deductible expenses and provides examples relevant to medical professionals.

Criteria for tax-deductible expenses

To qualify as a tax-deductible expense, the costs must meet specific criteria set by HMRC. You must also retain records and supporting documentation to justify any expenses claimed. The primary considerations are:

Wholly and exclusively
The expense must be incurred wholly and exclusively for the purposes of running your business. This means it must be directly related to your practice as a medical professional and not for personal use.

Dual purpose expenses
If an expense serves both business and personal purposes, you can only deduct the proportion related to your business. For example, if you use your phone for both personal and professional calls, you can claim the percentage of your phone bill that relates to business usage.

Examples of tax-deductible expenses

Understanding which expenses can be deducted is vital for self-employed medical professionals aiming to maximise tax efficiency. Examples include:

Professional fees
You can deduct fees paid to professional bodies and trade associations, such as membership fees for medical councils or societies. These are essential for maintaining professional status and accessing industry resources.

Medical equipment
Purchasing or renting medical equipment necessary for your practice is tax deductible. This includes diagnostic tools, therapeutic devices, and essential supplies such as PPE.

Office supplies
Expenses for office supplies used in the day-to-day running of your practice are deductible. This includes stationery, printing materials, and software subscriptions necessary for the business.

Premises costs
If you have a dedicated office or clinic space, you can deduct expenses related to its upkeep, such as rent, utilities, and maintenance. If you work from home, you can either claim a proportion of your home expenses that correspond to business use or the HMRC-approved flat rate, based on the number of hours you work from home each month.

Travel expenses
Travel costs incurred for business purposes are deductible. This includes mileage for visiting patients or attending professional seminars, public transport fares, and accommodation for overnight work-related travel. Travel to and from your usual place of work is deemed a personal expense and is not tax deductible.

Training and development
Costs for professional development are tax deductible. This includes fees for attending medical conferences, training courses, and educational materials that enhance your professional skills.

Insurance
Professional indemnity insurance and other relevant business insurance policies can be claimed as tax-deductible expenses. These are essential for protecting your practice from legal claims and ensuring financial stability.

Staff entertainment and gifts

Some staff entertainment and gifts can also be claimed as tax-deductible expenses, but certain criteria must be met.

Staff entertainment: Expenses can include annual parties, team-building activities, and staff outings. To be deductible:

• The event must be open to all employees.
• The cost per head must not exceed £150 per annum.
• If the total spend exceeds this, the excess will be taxed as a benefit-in-kind.

Staff gifts: Non-cash gifts given for birthdays, Christmas, or special occasions may be deductible if:

• The gift does not exceed £50 per employee.
• It is not part of any contractual obligation or performance reward.
• It is infrequent and not a regular occurrence.

Need help?

Understanding and claiming tax-deductible expenses can significantly affect the amount of tax you pay. Adhering to HMRC’s criteria and keeping accurate records will ensure compliance and optimise your tax position.

Remember, while an expense may be tax deductible, it should still be necessary for your business. Incurring costs solely to save tax is rarely efficient – expenses should be driven by business needs.

If you’d like tailored advice to help you maximise allowable deductions while staying compliant, we’re here to help.

Get in touch with your usual Larking Gowen contact, email enquiry@larking-gowen.co.uk, or call 0330 024 0888.

George Crowe