Managing expenses for GP Locums and Salaried GPs

Which expenses paid by the individual (not the employer) are tax deductible? Liz Densley explains.

The main rule is that expenses must be wholly and exclusively for the purposes of the work.

For employees it must also be necessarily in the performance of the duties of the employment so not to put in a position for carry out the employment, but as part of the actual duties.

TaxAid has produce a clear explanation for employees here; this link has links through to HMRC guidance giving even more detail: https://taxaid.org.uk/guides/information/issues-for-employees/employee-expenses

Sessional GP expenses: what can you claim?

* See ‘Protective clothing’ below for details

** See ‘Business mileage’ below for details

*** See ‘Working from home’ below for details

Most of the allowable expenses paid above by the employer will not be taxable as a benefit on the individual.

Tricky areas

Take care with the following common areas where GPs can make mistakes:

1 Protective clothing

PPE was specifically excluded from claims by employees on the basis that the employer should provide it.

2 Business mileage

For employees this would be from place of work to other sites outside your contract or home visits. If you are reimbursed at less than 45p a mile for business journeys, you can claim the difference if you are salaried If you are reimbursed at more than 45p per mile for business journeys, the excess is taxable.

For self employed: your home is the base where you are genuinely an ‘itinerant’ worker – and you take sessions all over the place. It becomes harder if there is any pattern of regularity – so if you always work every Monday in one surgery, that would become a place of work so travel to and from that surgery would not be allowable.

3 Training costs

Costs for salaried doctors will not fall within the wholly exclusively and necessarily in the performance of the duties rule.

For GP trainees, there is a specific tax case that accepts that training under a formal contract is ‘in the performance of the duties’ but post qualification training is not part of the performance of the duties (it is to put yourself in the position to continue to carry out the duties). In an ideal world, the employer would always pay the training and update costs.

4 Working from home

The rules were relaxed due to covid for ’20-’21 and ’21-’22 where you could make a claim of £312 if you had to work from home at all.

From ’22-’23 onwards you can only claim if your employer does not provide an office. You cannot claim just because you are allowed to, or choose to, work from home – or because you have to work from home because of Covid-19.

Things for which you get effective tax relief but which are not deductions in accounts

Things you might think should be deductible but aren’t

Fifteen examples that can trip GPs up:

• Travel to and from normal place of work.
• Smart clothing for work.
• Normal dry cleaning and laundry bills.
• Normal meals while on duty.
• Training to acquire an entirely new skill – e.g. MBA.
• Duality of purpose – where a cost cannot be split between business and personal use.
• Business entertaining and gifts.
• National insurance contributions.
• Locum insurance that is actually sickness insurance (i.e. it pays you if you are sick, doesn’t pay a locum to cover you).
• Permanent health insurance.
• Critical illness insurance.
• Private medical insurance.
• Private medical costs.
• Normal reading glasses: exception where glasses need to be for a specific focal length not suitable for personal use.
• Costs that don’t relate to the business in question e.g. visa costs to start a new job abroad.

If the above are provided by an employer, most will be a taxable benefit. Exceptions would be:

• Advanced training relevant to the duties of the employment.
• Uniform (not suitable for wear outside the surgery).
• Certain insurance where any benefit paid would be taxable.

Things that are not taxable

Luckily, not everything is taxable – for example:

• Interest and gains from ISA investments.
• Premium bonds and certain national savings certificates (not all).
• Dividends from VCT investments.

Things taxable at 0%

The following are treated as income for purpose of using basic and higher rate bands:

• First £1000 of dividend income from 23-24.
• First £1000 for basic rate taxpayers, £500 for higher rate, none for additional rate.

Grey areas in expenses

Not everything is clear cut!

Five examples of grey areas include:

• Courses in holiday resorts where it is debatable whether the holiday is more than incidental.
• Where is place of business? Home for a locum who is truly ‘itinerant’, but surgery for regular locum work.
• Training to extend existing knowledge resulting in a qualification e.g. masters degree.
• Mobile phone contracts where base fee cannot be split between business and personal.
• Season tickets for trains/buses where cost cannot be split between business and personal.

Liz Densley is a partner with Honey Barrett Medical Accountants, and co-founder and former secretary of AISMA (the Association of Independent Specialist Medical Accountants). You can contact her for more information at liz.densley@honeybarrett.co.uk.

Taken from our original article supplied to NASGP – https://www.nasgp.org.uk/

The information contained in this article is for guidance only, and does not constitute advice given by Liz Densley, or Honey Barrett. No responsibility can or will be accepted for loss occasioned to any person or entity as a result of action taken or refrained from in consequence of the contents of this article.