Running a successful dentistry practice involves more than just providing excellent care for your patient; it also involves careful financial management to ensure that you remain profitable.
One crucial aspect of this management is understanding what allowable expenses you can claim. Claiming all the expenses you’re entitled to can help your business operate more efficiently, but you need to know what you can actually claim.
What are allowable expenses?
Allowable expenses are costs that your business can claim against your taxable income. That reduces your pre-tax income, ultimately reducing your tax burden.
To count as an allowable expense, your costs must meet specific criteria to be eligible, particularly:
- Wholly and exclusively for business: The cost must be incurred entirely for business purposes. If an expense has both personal and business use, only the portion used for business can be claimed.
- Necessary for business operations: The item should be necessary for the day-to-day running of your practice. This includes costs that are fundamental to maintaining and operating your business.
Allowable expenses for dentists
You want to know what allowable expenses dentists can claim. Here are the main ones you should know about:
- Consumables: Everyday dentistry items, like gloves, masks and cleaning solutions.
- Premises costs: Rent for the practice premises, business rates, utility bills, and repair/maintenance costs.
- Administrative costs: Office supplies, printer ink, postage, and software subscriptions for practice management and accounting.
- Technology: Computer equipment and WIFI/phone bills.
- Staff costs: Salaries and wages, including houses, National Insurance contributions, and pension contributions. You can also claim expenses related to staff training and development.
- Travel and subsistence: Business travel expenses, including mileage allowances and public transport costs. You can also claim costs incurred on meals and accommodation during business trips.
- Miscellaneous expenses: Uniforms, laundry services for uniforms, and membership fees for professional bodies such as the General Dental Council (GDC) and the British Dental Association (BDA).
You might have noticed that some obvious costs aren’t on our list, including property refurbishments or extensions, and larger assets, like dental chairs and X-ray machines. That’s because these are capital expenses rather than allowable expenses, and are therefore treated differently. Remember: allowable expenses are necessary for the day-to-day running of your business.
Claiming allowable expenses: our top tips
Successfully claiming allowable expenses requires great attention to detail and an understanding of the rules. You can do some things to navigate the process a bit easier though:
- Keep detailed records: Keep comprehensive and accurate records of all your expenses. Proper documentation is crucial for making accurate claims and providing evidence in case of an HMRC audit.
- Separate personal and business expenses: Separate your personal and business expenses. This will ensure that you only claim for business items.
- Use accounting software: We would highly recommend that you invest in cloud accounting software that can help you track expenses. By relying more on automation and digital tools, you reduce the chance of human error, increasing the reliability of your financial records.
- Consult a professional accountant: Engaging with a professional accountant who specialises in dental practices can be invaluable. They’ll make sure that you’re correctly claiming for every expense that you are able to.
Looking for help with your accounting?
If you want some help with your accounting to ensure that you claim every allowable expense that you can, get in touch with us – we’ll make it our mission to help you where and when we can.
