Michael Lansdell from Lansdell & Rose Chartered Accountants talks this month about maximising tax relief on CPD and training.
CPD and training costs are inevitable for doctors and dentists. Are you maximising the tax relief you claim? Do you know how to accurately account for related travel costs? And is the nature of the training topping-up existing knowledge or gaining brand new knowledge – different rules apply.
The views expressed in this article are specifically those of Lansdell & Rose Accountants.
CPD for dental and medical professionals
The majority of doctors and dentists have an obligation to meet a CPD quota each year, so will attend seminars and training events, both in the UK and overseas, as well as carry out structured, private reading to meet required CPD hours.
There is often also a requirement to subscribe with a professional membership organisation such as BDA, BMA, GDC and GMC, which includes attending events.
On the other hand, many healthcare professionals also opt to study more comprehensive courses, such as Masters degrees or specialisms in new fields, where a different set of rules apply.
Wholly, exclusively and necessary for business
For any expense to be considered a “business expense” and therefore allowable for tax relief, it must meet the “wholly, exclusively and necessary” rule in tax legislation:
- “wholly & exclusively” for business purposes, AND
- 100% “necessary” for business operations
So that is the first thing to determine.
Maintaining existing knowledge
Doctors and dentists have a professional obligation to keep up-to-date with industry standards and patient care, always adding onto the initial skills and knowledge learned in their dental and medical training.
Therefore, when it comes to tax, maintaining existing knowledge is considered “wholly, exclusively and necessary” to protect the reputation of the individual and practice, and of course, provide the patient with the very best care.
Therefore, it’s allowable.
Gaining new knowledge
Gaining completely new knowledge adds a further layer of investigation before it can be deemed allowable for tax.
On the whole, gaining new knowledge (e.g. an accountancy qualification) is disallowable for tax purposes, if, the professional is self employed.
If the professional however, is an employee of a limited company, and this includes directors, then there is a possibility of claiming all or some of the cost of the training, if, it can be qualified as “necessary” for the purpose of the business.
So here the rules clearly vary depending on your trading status.
There are also occasions where training is both “maintaining” and “gaining”. Here the expense can technically be apportioned, but it can get complicated, so it is always best to seek the help of an accountant.
Lansdell & Rose are specialist medical and dental accountants with a key focus on tax planning for healthcare professionals.
Contact Michael today for bespoke tax advice
What expenses can be claimed for tax
Once the nature of the seminar or training event has been determined, and, if it meets the “wholly, exclusively and necessary” rule, then all related costs can be claimed for tax.
This would include the course fee, accommodation, subsistence and the related travel expenses.
The “wholly, exclusively and necessary” rule needs to be further applied to additional costs as well though.
For example, if you attend a 2 day seminar in Dublin on the Thursday and Friday, deciding to take your spouse along and stay the weekend to explore the city, there would be a personal element to the trip and the rules would change.
The entire travel costs would become disallowable. The accommodation and food would still be allowable but only for the costs directly related to the seminar, the rest would be disallowable.
As with everything tax related, it’s best to get professional advice.
Download the Lansdell & Rose FREE Help Sheet with more information on claiming tax relief on CPD and training costs.
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