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How to... maximise tax relief

Legitimate ways of keeping as much of your hard earned income as possible from the taxman begin with knowing what tax relief you are entitled to claim in your annual tax returns. To some extent the following advice is more relevant to GP principals, who are taxed as self-employed, than to GP assistants on PAYE.

To maximise tax relief, these are some of the strategies you should consider:

1) Claim for membership subscriptions for professional bodies such as medical defence unions, GMC and BMA.

2) Claim for out-of-pocket expenses, such as mileage, when attending professional meetings – such as meetings with the PCT.

3) Claim for day-to-day car expenses. However these do not include driving to and from your main place of work. Mileage logged in the course of visiting patients should be carefully recorded and kept – with petrol receipts – in case the Department of Revenue and Customs requires evidence.

4) Exploit tax-efficient investments such as ISAs, National Savings and various other schemes. You may need guidance from an independent financial adviser.

5) Open a personal pension plan to cover all non-NHS income.

6) Involve your spouse in a number of ways, including:

  • payment of a salary to cover genuine employment in your service
  • payment into a personal pension scheme
  • transfer of investments if they are on a lower level of tax or below the personal allowance level of £5,035

7) Minimise capital gains tax on sums above £8,800 per annum, and inheritance tax above £285,000, through the judicious and timely transfer of funds between spouses and children.

8) Claim for heating, electricity, telephone and computer use when work (such as the writing of medical reports or holding practice meetings) is done at home.

When deciding on what claims to make, remember the words of Dennis Healey, Chancellor of the Exchequer, 1974-9: 'The difference between tax avoidance and tax evasion is the thickness of a prison wall.'

Dr Jim Sherifi is a GP in Sudbury, Suffolk

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