What expenses can be claimed?
Business expenses are tax deductible if they are incurred ‘wholly & exclusively’ for Private Practice/Locum purposes e.g. a specific trip to buy some stationery would mean the business mileage plus the cost of the stationery is tax deductible. If on the other hand you merely called in to buy some stationery on your way back from visiting family, the only tax deductible business expense would be the stationery cost as the mileage was not business specific.
The key question is was the expenditure business specific or did it have a dual purpose? For example, if you purchase a new computer that is used 60% for business purposes and 40% by the children, then the business tax deductible capital allowances claim would be restricted to 60%.
Do you need a separate bank account?
It would be prudent to have a separate bank account in which business income is deposited and business expenditure paid out of. The main reasons for this are to ensure all business expenditure has been accounted for in the event of you mislaying a receipt. In addition it is much easier to deal with any tax enquiry raised by HM Revenue & Customs (HMRC), as you will have available business specific records as opposed to these being mixed with your personal current account expenditure for example.
Taking this a step further you could also consider using a specific credit card for Private Practice/Locum business purchases only. This way any missing business receipts would be easily identified on the credit card statement.
Given the majority of people now have smartphones and other mobile devices you could even consider taking a picture of each business receipt and storing this is a specific folder on your computer. This way receipts would not be lost and could be easily retrieved in the event of a HMRC tax enquiry. There are also various apps available that would also assist with this.
A reminder that business records need to be kept for a minimum of six years and failure to maintain accurate business records will potentially result in significant penalties being imposed by HM Revenue & Customs.
Even more important missed business expenditure results in more tax being payable.
Please get in touch if you have any queries Jason@doctorstax.co.uk
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