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Tax relief on employment expenses

‘Tax deductible’ means that the cost of an item or expense can be subtracted from your adjusted gross income, in order to reduce the amount of income that is subject to tax. This section does not cover whether or not you are able to claim back any expenses from your employer in full – only whether the amount can be deducted from your taxable income.

A tax-deductible expense must be an expense that you have incurred ‘wholly, exclusively and necessarily’ in the performance of your duties of employment. It is an expense that you had to pay while doing your job, and that related only to doing your job.

  • BMA, MDO, GMC and other professional memberships and annual subscriptions

    • to make a claim for any professional memberships, you must be involved in the practice of the profession and the membership must be a condition for practising that profession
    • to make a claim for any subscriptions, these must be with an HMRC-approved body and must be subscribed for the advancement or spreading of knowledge and the maintaining or improvement of standards of conduct amongst members of the profession
    • for GMC subscriptions, you can download this from their website. Any subscriptions that need to be paid may depend on your individual role.

    A list of eligible professional bodies can be found on the HMRC website

    You can email the BMA, MDO and GMC to ask for a statement of fees paid to make a claim. This can take time, so ensure it is done well within the deadlines.

  • Travel and subsistence expenses

    Tax relief is generally available for T&S (travel and subsistence) expenditure when an employee travels between two places of work or for travel between an employee’s home and a ‘temporary workplace’. T&S expenses include the costs of travel, any subsistence expenses and other journey costs.

    Relief may be available for the cost of journeys to a location the employee has to attend for work – ‘to the job’ travel – but only if the location is a ‘temporary workplace’. A temporary workplace must not be the base from which the duties are usually performed and work carried out there must not be expected to last for longer than 24 months.

    There is no tax relief for ordinary commuting, for example travel between home and a permanent workplace. A permanent workplace is one where the employee attends for a period that lasts or is likely to last for more than 24 months, or where the employee will attend for all or almost all of the time they are employed there.  

    Relief is also available for journey costs where the employee had to travel while ‘on the job’ – this travel is either part of their duties or because they had to be somewhere other than their normal place of work.

    Consultants who operate from different hospitals and clinics or who carry out private work from various hospitals and home should take advice on their particular circumstances before making a claim for travel and subsistence expenses.

    Recently, tax cases on self-employed income and relief have been heard in the courts and HMRC are currently reviewing these cases carefully.

    Case study

    In the case of Dr S Samadian v HMRC 2014, a claim for tax relief on travel between different workplaces was disallowed.

    Dr Samadian was employed as a full-time NHS consultant at two hospitals. He was also a self-employed consultant looking after private patients, holding weekly clinics at two private hospitals. In addition, he carried out clinical research and prepared treatment plans for his private patients at his office at home.  

    HMRC disallowed Dr Samadian’s travel costs for his journeys between the private clinics and his places of work at the NHS hospitals, and between the private clinics and his home, on the basis that the journeys had an element of private purpose and were therefore not wholly and exclusively for the purpose of Dr Samadian’s profession.

    The FTT (first tier tribunal) upheld this decision. On appeal to the upper tribunal, the FTT’s decision was further upheld.   

    In the case of Dr Sharat Jain v HMRC TC 04788, an NHS consultant who carried out private work at weekends from various hospitals was disallowed his home-to-hospital travel and subsistence expenses on similar grounds – that they were not wholly and exclusively incurred.

    This is a complex area and specific advice on your individual circumstances is essential.


    Junior doctors

    There are different rules regarding travel to work for junior doctors depending on the type of training contract they are on.

    Find out more in our bespoke junior doctors' tax guidance

  • Education and training costs

    The question of whether or not education, exam fees and other training costs are tax deductible is a complex one and an area that HMRC reviews regularly.

    HMRC guidance is very clear and conclusive – the costs of travel to courses, course fees and other associated costs are generally tax deductible if attendance at the event is an intrinsic part of the employment and one of the duties of employment


    Case studies

    ‘A trainee doctor employed as a registrar on a training contract is required, as a stated contractual duty of the employment, to attend various external training courses. As part of the duties of the employment there is a mandatory requirement to maintain a national training number by attending a series of training courses and events. Failure to complete the course and obtain the qualification will mean that [they] cannot proceed to the next stage of [their] chosen profession.

    Attendance at the training events is an intrinsic part of the employment and one of the duties of the employment. The costs of travel to the events, course fees and other associated costs met by the employee are deductible.’


    Training that is not an allowable deduction

    HMRC guidance set out in EIM61018 is more restrictive in that expenses incurred by doctors in relation to training activities and CPE (continuing professional education) are not an allowable deduction because the training activities are not undertaken in the performance of the duties of clinical work. This is the case even when the training activities are compulsory.

    The guidance at EIM32535 summarises what the doctor must demonstrate by reference to the contract of employment and other relevant documentation in order for a claim to be accepted:

    • training is an intrinsic part of the contractual duties of the employment
    • all other duties are being undertaken as part of the training process. They constitute the practical aspects of the training process and are intended to complement the theoretical aspects of the training, which include the externally provided training
    • there is a mandatory requirement for the employee to undertake the external training as an intrinsic part of the duties of the employment and failure to complete the training and obtain the qualification will mean that the employee will not be able to continue in employment with the employer in the role that would otherwise have been available to them after qualification.

    Case study

    In the case of Revenue & Customs Commissioners v Dr Piu Banerjee (2010), the court of appeal accepted that a deduction for training costs incurred by an employee should be allowed if the employee was employed on a training contact where training was an intrinsic contractual duty of the employment and where any personal benefit (unlike most CPE courses), would be incidental and would not give rise to a dual purpose of the expenditure.

    Relief has been denied in the following tax cases:

    • Parikh v Sleeman (63TC75) – a hospital doctor was refused relief for the expenses of attending training courses during periods of study leave
    • Snowdon v Charnock (SpC282) – a specialist registrar was refused relief for the expenses of undergoing mandatory personal psychotherapy
    • Consultant psychiatrist v CIR (SpC557) – an NHS consultant was refused relief for the expenses of CPE necessary to maintain their professional qualification
    • Decadt v CRC (TL3792) – a specialist registrar was refused relief for the expenses of taking professional examinations, even though it was a condition of their employment to do so.

    HMRC draws a distinction between preparation for performing the duties of the employment, which may include attending educational courses and actually performing those duties when considering expense claims. Expenses of preparation are not generally deductible.

    The expense must be incurred in performance of the duties of the employment. It is not enough for the expense to be relevant or incurred in connection with the duties of the job.  Nor is it enough if the expense merely puts the employee in a position to start work or keeps the employee qualified to do the work.

    HMRC will not automatically allow a tax deduction for exam and other educational and training costs paid personally by a doctor. Whether the expenses are allowed will depend upon your specific circumstances.

  • How do I claim tax relief on expenses?

    You can claim tax relief for your expenses in the following ways:

    • complete form P87: tax relief for expenses of employment
    • complete a self-assessment tax return, if you are already in self-assessment or the expenses amount to more than £2,500 (see ‘Tax returns’ for more information)
    • for exam fees (subject to the above commentary), you could also write a letter to HMRC stating that:
      - you are employed under a training contract (provide a letter from your deanery/LETB or your employment contract to support this)
      - you took mandatory examination/s (specify which) to meet the requirements of your training
      - you believe that the cost of the examination/s is now tax deductible
      - find out more

    The BMA has developed a template letter to be used as a basis to draft your letter to HMRC

  • Mileage rates and allowances

    ‘Mileage allowances’ are paid when an employee uses their own vehicle for work purposes. When your employer pays a mileage allowance they are reimbursing at a fixed amount per mile for using your own vehicle.

    The mileage allowance you receive is exempt from tax, up to certain limits set by HMRC. If the mileage allowance paid exceeds the limits then the employee makes a profit and must report this to HMRC. The profit is taxed as employment income. If the mileage allowance is below the tax-exempt limits, the employee makes a loss that can be claimed as an employment expense and should be reported to HMRC.

    The tax-exempt limits depend on the employee’s business mileage in a tax year. Business mileage does not generally include travelling from home to work. If an employer does reimburse an employee’s travel costs from home to work, this will generally be a fully taxable benefit.

    If you are unsure how to calculate this, you can speak to a tax adviser for help.

    See the current HMRC mileage allowances

    NHS rates

    The mileage allowance you can receive is based on mileage rates set by the NHS

  • Tax-deductible items

    It is not possible to provide an exhaustive list of allowable expenditure, as the requirement of one post will not always be the same as another. In summary, a good indication of whether the expenditure satisfies the ‘wholly, exclusively and necessary’ rule is if it is listed in HMRC’s allowable annual subscriptions to approved associations.

    Possible examples include:

    • scrubs
    • theatre shoes
    • stethoscopes
    • laundry charges if you have to launder your own uniform
    • any tools and specialist equipment that is specifically required, necessary and used in the performance of your particular work.