Locum pharmacists often overlook making legitimate expense claims, which can include anything from insurance cover to a new laptop. Sometimes these extra sources of income are left unclaimed for many years.
So how can you avoid losing out on this valuable part of your locum income? By making sure you check off everything on our essential guide to self-assessment and claiming expenses.
If you’re working as a self-employed locum pharmacist or earn income from freelance or contract work, then you are required to submit a self-assessment tax return to disclose your aggregate income in a tax year.
If this is the first year you have been receiving income from more than one source, then you must register for self-assessment with HM Revenue and Customs (HMRC). On registration, HMRC will issue you a unique tax reference number (UTR), and with this you should disclose all your income for 2016-17 and submit your self-assessment tax return online.
To establish whether you are employed or self-employed as a locum pharmacist, it is vital to look at your contract (see below for more details on the difference). Employed pharmacists work under a ‘contract of service’, while self-employed pharmacists work under a ‘contract for service’.
Employed or self-employed?
Here are six factors to consider when deciding whether you are employed or self-employed. You are probably self-employed if most of the following applies to you:
1. You can decide when you work and where.
2. A substitute could be hired for you.
3. You provide your own equipment.
4. You are at financial risk if work is not done.
5. You generally don’t have management responsibilities.
6. You are unlikely to benefit from profits, such as through bonuses or incentive schemes.
As a locum pharmacist is likely to work as a sole trader or through his or her own limited company, there will be certain expenses that can be claimed legitimately for tax purposes.
As a general rule, expenses can only be deducted from income if they’re incurred “wholly, exclusively and necessarily” in performing pharmaceutical duties.
All of the following kinds of expenditure can be claimed for – go through the checklist below and think about what applies to you:
Are you a member of a professional body?
Pre-registration fees, and membership of professional bodies – such as the Pharmacists’ Defence Association, the General Pharmaceutical Council and the Royal Pharmaceutical Society – can be claimed back.
Are you paying out for insurance cover?
Insurance premium costs can be claimed as a business expense, provided the cover is specific to locum business.
Printing, postage and office stationery
This includes business stationery (such as letterheads, business cards and brochures), leaflets to distribute to community pharmacies, and the cost of office stationery such as envelopes, papers, pens and pencils. Remember to retain all your receipts.
Don’t get overcharge
All business overdraft, bank and credit card account charges can be claimed for, as well as hire purchase interest and lease payments – for example when buying a car for work.
Monthly contract charges for telephone and internet are allowed.
Paying other professionals
You can claim expenses for professional fees to accountants and solicitors for hiring their services. However, fines for breaking the law are not allowed.
Repairs and renewals
All repairs and maintenance costs of IT equipment, small tools and items of equipment.
Save for your golden years
Contribution to a registered pension scheme can be claimed on expenses – up to the annual limit of £40,000 in 2016-17.
Don’t forget travelling costs
You can claim for travelling in the performance of your duties – such as visiting patients’ homes, care homes or medical centres. This also includes mileage related to work, such as business trips, at 45p a mile. However, travelling to and from home and work is not an allowable expense.
Most charitable donations are allowed.
Working from home?
When locums work from home to do their paperwork, then a proportion of the running cost of the home can be claimed back. HMRC allows £18 per month (£216 annually). If your claim is for a higher amount, you will need to be able to justify it.
Claim for your laptop
If you use your personal equipment – such as a laptop – for work, then a proportion of the cost can be claimed.
Amendment 27/06/16 09:30. The original version of this feature said mileages related to work could be claimed at the rate of 40p a mile. This has been changed to 45p a mile.