Can I put laboratory bills against tax

GlasgowDentist

Hi there,

Just a quick question regarding my self assessment.

I am an associate dentist and not salaried. For those unfamiliar with the way dentists get paid, I generate X amount from the treatment I carry out, Laboratory fees for crowns/dentures etc are deducted from this total and I take home 50% of the final sum

On this basis I am essentially contributing to 50% of the lab bills.

What I dont understand is that the cheque given to me at the end of each month already has the lab bills taken off.

I understand that tax deductions need to come off my gross pay, so would I have to work out what my earnings would have been before lab bills then deduct my 50% contribution as expenses?

Im confused...

brook2jack

No you declare the amount of money paid to you by the practice after deductions including labs,waste etc.

I guess you have not done a self assesment before. It is very simple but many associates come a cropper very easily. Use an accountant who is knowledgable about dentistry this year to do your accounts ,ask questions and then do your own accounts from then on.

Trust me you do not want a tax investigation so a little investment now will pay dividends later.

There are very few deductions an associate can make (GDC,indemnity,BDA, courses, etc) so ask the accountant.

GlasgowDentist

damn...

Thanks for your reply. Do you have any opinion either way of associates registering as a limited company?

Thanks for the reply

brook2jack

If you register as a limited company as an associate you cannot get a nhs pension. So limited company status is not advised for associates as nhs pension is only benefit you get!!

antrobus

If you're a associate dentist of some kind, you usually get some kind of 'salary' statement from the practice that shows the fees you've earned and the lab costs incurred. Where say, the total fees received were £20,000, and the total Lab fees paid were £2,000, you would get paid 50% of £20,000 less £2,000 or £9,000. Normally you'd then show in the Profit and Loss of your dentistry business - income of £10,000 and lab expenses of £1,000, leaving you with a profit of £9,000, which is the number you first thought of. (Ignoring any other deductions for statutory levies and superannuation which may apply.)

Or to put it another way; yes you do claim 50% of the lab bills as an expense, but you gross up the income to account for it.

And yes I realise that this answer contradicts its predecessor, but that is how I've seen it treated in a number of accounting statements prepared for dentists. Not that it necessarily matters that much, since under self assessment HMRC may well never see it anyway.

brook2jack

It does matter since just your "claimable" expenses such as indemnity , GDC reg etc put you above average business expenses for level of "turnover" and in the past this has led to letters warning that these high levels of expenses may lead to investigations. Yes you keep the principals working of how your gross is obtained but the figure you put in is the end part of the calculations.

Many of us have had letters warning that high levels of expenses are likely to result in investigations and so in the comments part of the return I always break down expenses re indemnity etc.

All of this only applies if the practice does all of the handling of patients cash etc and pays lab fees direct.

Pennywise

I agree with B2J. The lab fees aren't paid for by the associate nor is the associate personally liable for them. They're incurred by the practice so they are shown as expenses for the practice, not the associate. The associate's "sales" are the amount received from the practice after deductions and apportionments, in exactly the same way that the practice shows the payments to the associate as an expense along with 100% of the lab bills.

The only thing I'd add is that you have to make sure that the practice havn't deducted any "disallowed" expenses, such as the NHS superannuation which would need adding back to the amount received and claimed for separately in the personal tax return as they shouldn't appear anywhere on the associate's P&L account.