Tax relief means either paying less tax as a result of spending money on certain things or getting a tax rebate or repayment.
All employees can claim relief on expenses related to employment – but most people don’t know they can, or don’t know how to.
Junior doctors spend money on their jobs constantly, so it’s worth knowing what can be claimed for and how to claim, as you could be missing out on refunds of huge amounts of money!
What qualifies for tax relief on expenses?
You can claim tax relief if all of the following apply. You:
- Use your own money for things you must buy for your job
- Only use these things for work
- Don’t get repaid the money you spend
- Have paid income tax in the year
The expense must be an expense that was incurred “wholly, exclusively and necessarily” in the performance of your duties of employment. In other words, it is an expense that you had to pay as a result of doing your job, and the result of that expense must be used for your job only.
This list is not exhaustive, but common things that junior doctors can claim for include:
- Professional membership fees of the GMC, medical defence organisations, and the BMA.
- Speciality college membership fees (but only if being a member is a requirement for practising or training in that specialty) – there is a list of allowed organisations here.
- Certain medical courses and examinations, some of which are listed here.
- Certain pieces of equipment and kit, like stethoscopes, theatre shoes and scrubs.
- Travel and subsistence if needing to attend a “temporary workplace” (but not for daily commuting).
Unfortunately, these claims are never for certain as they remain at the discretion of HMRC and are based on your individual circumstances.
The BMA has an extremely useful page on tax relief which details the above and lists more specific case-scenarios.
How much tax relief will I get?
You get relief based on what you’ve spent and the rate of tax you paid for the year. In essence, you get a return of the tax you paid on the particular item.
For example, if you spend £100, and you pay tax at a top rate of 20%, you can claim and be returned £20.
How do I claim tax relief on expenses?
There are several ways in which you can submit a claim for tax relief, depending on your circumstances.
The simplest way to do so is to complete a form P87, which can be done online or by post. You can use a P87 form if you are claiming up to £2,500 in expenses in a single year. HMRC have helpfully created an online tool to check if you can claim tax relief this way.
If you are claiming for more than £2,500 in a single year, or have other circumstances which require you to fill out a Self Assessment tax return, you must submit your claim this way. Not everyone will be required to fill out a Self Assessment. For example, you may need to if you:
- Earned a total income of over £100,000
- Received rental income on a property over £2,500
- Have any untaxed ad-hoc income of over £2,500, for example through cremation-form-filling fees or other trading activities.
This is a non-exhaustive list. HMRC again have created a really handy tool to help check if you need to complete a Self Assessment return.
When do I have to claim the tax relief by?
You must claim within four years of the end of the tax year in which you spent the money.
A tax year in the UK runs from 6th April to 5th April the following year.
So if your expenditure was incurred in January 2019, for example, you would have until April 2023 (four years past 5th April 2019) to claim for the expenses.
What about other forms of tax relief?
You can claim tax relief if you’re moving abroad to work, for example post-FY2, or if you’re doing some out-of-programme experience or training.
The principle behind this is tax residency – if you are tax-resident in the UK, you will pay tax on your worldwide income. Likewise, if you are tax-resident abroad, you will likely be liable to pay tax only on UK-sourced income.
To ensure you are not being taxed in two jurisdictions, you must let HMRC know that you’re leaving the country by completing a P85 form.
Doing this will help ensure you’re not taxed twice and you might even be eligible for a rebate on the tax you’ve already paid.