Dentists Tax Returns - Staying on the good side of the Taxman

1. It is commonsense to not spend all the money you are paid at end of each month. As you are paid without deduction of tax at least 40% of earnings should be put aside to pay income tax and national insurance, both of which will be calculated and collected through the completion of your Tax Return. Be alert that the first tax payment can be a hefty and with no cash flow there can be financial penalties.

2. Make sure your paperwork is in order. All your pay invoices and expenses with supporting receipts in date order and filed separately. This will not only tidy documents when it comes to prepare your Tax Return and Accounts but will also ensure that you have proof of spend should HM Revenue & Customs enquire.

3. When it comes to prepare your accounts, whilst earnings are straight forward to record, expenses on the other hand can present an issue of what can be claimed. The guidance is that as a self employed person, expenses are allowed which have been incurred ‘wholly and exclusively’ for business purposes.

For an associate dentist these are typically:

a. Superannuation contributions, payments to professional organisations, levies, dentists tunics, business journals, conference costs, attendance to courses for the maintenance of continuing professional records, practice costs, dental eyewear, lab fees and nurse costs.

b. Motoring costs for home to work travel are not a business expense so are not allowed. Travel from the surgery to the lab and between surgeries is allowed.

c. Traveling to overseas destinations such as Dubai for dental courses are a wonderful perk and many attendees will lengthen stay to combine business and holiday. Whereas the cost for the course, accommodation and travel is allowed, the cost of taking your family with you and/ or extending your stay as holiday is not. HM Revenue and Customs will look for outrageous amounts.

d. Using your home as an office is a tax grey area. You can claim relief if you are doing work from home but only for amounts that are deemed reasonable.

e. If you are thinking of declaring expenses for a spouse/ partner as a secretary then you may need to rethink how you do this. Is your partner indeed doing justifiable ‘secretarial’ work? Take expert advice as HMRC are aware of this.

f. Expenses which are in part personal and part business should be apportioned as such before declaring.

g. There are of course other expenses which can also be claimed providing that they are for business purposes.