Whilst pay freezes and pension reforms have taken their toll on the brave and hard working of the NHS, thousands of doctors have also been missing out on income that’s rightfully theirs.
I haven’t yet met a doctor who hasn’t put a hand in their own pocket to pay for work related expenses. All well and good, except the vast majority of them forget to claim for those expenses and miss out on the tax return due to them.
So what can you claim for and is it really worth all the hassle?
What expenses can you claim for?
HMRC classify tax-deductible expenses as either ‘travelling you had to do in your job’ or ‘other expenses you had to pay in doing your job – and which related ONLY to doing your job.’
Unfortunately, HMRC don’t provide a definitive list so a bit of common sense has to prevail here.
Some of the more popular items are:
- Professional fees and subscriptions: BMA, GMC, MPS, Royal Societies…the list is long for this area
- Business mileage or fuel, excluding commuting to your normal place of work
- Tools and specialist equipment such as theatre shoes, stethoscopes and so forth.
“But what about all those courses and exams I have paid for?” I hear you say. It’s true, they can add up to what feels like a Greek bailout fund. The downside is that HMRC sees them as career progression and doesn’t normally allow them.
How do you claim your expenses?
If your claim is less than £1,000 then you can send an old fashioned letter to HMRC with a summary of the details and the total for the tax year (not forgetting to tell them who you are and your National Insurance number).
Or, if you’ve had a successful claim in the past and you want to listen to 5 minutes of recorded message, you can phone them (must be the civil servant cuts!).
If your claim is for over £1,000 but under £2,500, you will need to complete and send a short form called a P87 that’s available from the HMRC’s website.
Anything over £2,500 and you will need to claim via self-assessment.
Here’s an example
If a Registrar claims for this years’ worth of BMA and GMC subscription, it can be in excess of £625. If they send a letter to HMRC explaining this, HMRC will increase the Registrar’s personal allowance tax code by £625.
This means that more of their income is untaxed, thus they receive tax relief at their highest rate. In this case, that’s likely to be 40%. So, £625 x 40% = £250 more income in their pay.
It gets better! If you haven’t claimed before then you can claim for expenses in previous years (although there is a limit). You may need to scroll left and right if you’re viewing the table below on a small screen.
|Tax Year||Tax Year Ended On||You Must Claim By|
|2012-13||5 April 2013||5 April 2017|
|2013-14||5 April 2014||5 April 2018|
|2014-15||5 April 2015||5 April 2019|
|2015-16||5 April 2016||5 April 2020|
Table sourced from HMRCs website
If this same Registrar had paid but not previously claimed for their BMA and GMC subscriptions in the previous tax years, they would be looking at 4 years’ worth of expenses. Assuming they had the same costs as above for all 4 years, that’s 4 x £250 = £1,000.
That’s £1,000 for the time it takes to pen and send a simple letter!
What are the drawbacks?
All doctors should be declaring any additional income that they receive, including cremation money. This needs to be added to your letter to the HMRC as earned income, although it will offset any expenses you are claiming for.
Lean on your comrades!
Because of the complexities of what you can and can’t claim for, it is advisable, in many instances, to engage the services of a good accountant or tax adviser. This is particularly so if you need to claim your expenses going back a number of years or if you have private practice income.
Winston Churchill once said “A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Why not take a cue from some of the spirit of the blitz, dig for victory and grow your own income!
Updated in January 2017
Legal & Medical Investments Ltd is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate tax advice. The tax reliefs referred to are those currently applying in the United Kingdom to UK Tax Residents. These tax reliefs are liable to change. The value of any tax relief available will depend upon the individual circumstances of the taxpayer.