Tax treatment of travel expenses for doctors and dentists

This is a highly topical tax subject for doctors, dentists and indeed the healthcare profession as a whole. For this article I refer to a recent tribunal known as The Samadian Case. Here is the background: Dr Samadian is a consultant geriatrician with a full time NHS employment across several hospitals as well as a private practice at two private hospitals. He trades as self-employed and he has an office at home. A fairly common trading structure for consultant medical professionals and the rules can also be applied to dentists working between multiple practices and a home office.

The case so far

The case was centred around the tax relief claimed on travel costs relating to the private practice. In summary, the “First tier tribunal” ruled the following: 1) Journeys between the NHS hospitals and the private hospitals were considered NOT allowable 2) Journeys between Dr Samadian’s home and the private hospitals were considered NOT allowable (except in very specific circumstances) 3) Journeys between the NHS hospitals and a patient’s home were considered allowable (in most circumstances) In addition the “Upper Tribunal” backed the above ruling 100% after Dr Samadian took his case to appeal. To the tax payer, clearly this isn’t good news as opportunities to claim tax become limited. Regardless, understanding the legal parameters for healthcare professionals is important so as to not fall risk of investigation.

What classifies as a business journey?

100% for business

A business journey that is allowable for tax relief is that in relation to itinerant work only. This means that journeys between places of business purely for business purposes are generally allowable as a deductible business expense, such as with Dr Samadian visiting a patient at home (business purpose) when travelling from the NHS hospital (place of business).

Home office to work 

Travel expenses from home to a place of work regardless if there is a considered “home office” are generally not deductible, because it appears to break the fundamental “wholly and exclusively” tax rule. Essentially, all expenses become tax deductible when they are wholly and exclusively for business purposes and that the cost is 100% required to carry out that specific business activity. With Dr Samadian, his house was both a home office and a family home, so had dual purpose; personal and business. HMRC will also argue that work only starts when you, the doctor or dentist, i.e. the “trader”, first get to the patient, i.e. the customer.

HMRC final decision

The final decision on the Samadian case and all related cases will be decided by HMRC in the coming months. The key, as always, is linked to providing evidence. In this case the evidence required is to demonstrate the “place of business”.  If this is a home office, are activities undertaken there exclusively for business purposes? Must the activity be carried out there? Could the activity in fact be carried out in a work office? This remains an area high on the radar for HMRC and an FAQ from many of our dental and medical clients.