Self-employed and locums frequently forget to submit proper expense claims, which might range from a new laptop to insurance coverage to general stationery purchases. In this article, we aim to provide you with some of the key information you need to prevent losing a significant portion of your income on unclaimed business expenses.
Are you considering becoming a self employed / locum and unsure about the accounting and tax requirements to keep you compliant? Are you unsure about the expenses you can deduct to ensure you are not left with a large tax bill?
As a locum or self-employed individual, the amount of tax you owe will depend on how much money you earned during the tax year (and accounting period if a limited company), but there are some expenses you can deduct to reduce your tax liability.
You are permitted by HMRC to write off the cost of a number of purchases that you make in order to operate your business. These expenses can be subtracted from your income, which will reduce your profit and in turn reduce the tax you owe.
Office, property and equipment
You must perform some administrative tasks as a self-employed individual to stay on top of your accounts, spending, and taxes. You then accrue claimable business costs as a result.
You can claim for:
- Office consumables such as printer paper and ink
- Phone and internet bills plus software subscriptions – such as online accounting
- Use of home allowance for performing administrative tasks from home
Travel
All locums incur travel expenses. These may vary from shift to shift and month to month depending on where you are working. The good news is that many of your travel expenses can be claimed back:
You can claim for:
- Mileage incurred on your personal car whilst travelling to your locum work place, to attend your training venue, etc
- Parking costs or bus, train, air or taxi fares
- Hotel rooms and meals on overnight stays
You cannot claim for:
- Parking or speeding fines
- Clothing expenses
Protective / Specialist Clothing
Whilst new clothing isn’t an everyday expense, you do use specialist clothing as part of being a medical professional.
You can claim for:
- Protective clothing such as a lab coat or eye safety glasses
You cannot claim for:
- Ordinary clothing – even if you wear it to work
Professional Fees
Remember that super helpful accountant who guided you through the process of becoming a self-employed locum? The good news is that they are a legitimate business expense.
You can claim for:
- Professional indemnity insurance premiums
- Business bank account and credit card charges
- Hiring an accountant
You cannot claim for:
- Fines for breaking the law
- Loan or hire purchase repayments
Marketing, entertainment and subscriptions
There are many other areas of being a locum that will generate expenses that can be offset against your tax, these may be promoting your services, journals you subscribe to or even entertaining.
You can claim for:
- Your pre-registration payments and professional membership dues to organisations like the Royal Pharmaceutical Society and the General Pharmaceutical Council.
- Relevant trade publications
- Advertising and website costs
You cannot claim for:
- Gym membership or payments to political parties
- Buying your manager a drink at the pub after your shift has ended
The key takeaways from this article are…
- All expenses must be incurred as a self employed locum and HM Revenue & Customs may ask you to provide evidence of this i.e. you must have actually incurred the expense.
- Whether you prefer to keep a physical copy or a digital copy make sure you keep your receipts as HMRC can request to see them anytime during the 7 years after the expense was incurred.
- Since expenses are subtracted from your annual income and you are only taxed on your profit, your tax bill will be lower with the more expenses you have. However, keep in mind that even while expenses are tax deductible, they still represent a cost deducted from your profits, so only purchase things that you truly require.
To keep yourself on the right track don’t forget that all expenses should be discussed with your accountant to ensure that they are valid claims.
If you are looking for an accountant to help and guide you with your locum / self-employed accounting and tax needs, please get in touch. You can reach us on 0114 473 3844 or e-mail [email protected].