Claiming for your medical expenses as a UK business
We are often asked “Can I claim for my Masseuse/Chiropractor/Physio/Glasses/Chiropodist as business expense? And therefore does it qualify as tax deductible?” And the answer is, unfortunately, very unlikely.
A client’s reasoning for this perfectly legitimate question is usually along the lines of “my back aches due to sitting at my desk all day” or “I need my glasses to see my work.” This is all very reasonable of course but the de facto HMRC rule for determining if a medical expense is a tax deductible business expense is if it is incurred wholly and exclusively for the purposes of the trade, profession or vocation.
Sheesh. So where does that leave you then? Well let’s dive into that a bit more…
Is It Worth Claiming Medical Expenses On UK Taxes?
Absolutely you should be claiming legitimate medical expenses to reduce your tax liability. We’re accountants and would be crazy to suggest otherwise! Our job is to help you file an efficient and legal tax return.
The question is what is a genuine work related medical expense according to the HMRC ruling - and the scope for this is really narrow. That’s where we need to ensure we are really sticking to the letter of the ruling or you’ll risk your expenses being rejected… or worse… a fine.
What Medical Expenses are not tax deductible as a Sole Trader?
The list of allowable medical expenses for a sole trader is sadly very narrow, in fact almost everything is excluded including some surprising cases which most people assume are going to be ok. Let’s tackle them as they are the most likely expenses that you might think you were able to submit… but unfortunately not:
You need your gnashers to eat every day so even if you are a model, sadly this is not a legit expense!
The rule of thumb for any medical claim is that you need to be able to completely prove there is no personal benefit to any treatment related to the medical expense. Separating the “benefit to your business” from “personal benefit” is very hard to prove and often leads to failed claims.
Physio for Injury
In the case of needing physio for your back (as an example) HMRC would argue that you don’t just need your back for work you also need it for generally being alive, therefore its not wholly and exclusively for the purposes of your business.
Examples of denied medical expenses claims:
A client once included around £3k of expenses under the category “wellness”, she wanted to include in her business accounts medication (paracetamol, plasters, etc), massages, counseling sessions, beauty treatments (facials, nails, hairdressing).... None of this was allowable as it all had a personal benefit element.
There was another case of a hairdresser who tried to claim expenses for counseling to deal with the stress of her job. It was ruled against her on the grounds that there was a personal benefit to good mental health.
There was a legal case where a musician injured his hand but it was ruled not allowable as he needed the use of his hand in his personal life as well as his business.
The case of Norman v Golder is quoted in the HMRC manuals under “work induced illness” - a shorthand writer for the courts argued that his illness was a direct result of the unfavorable conditions of his work and that his medical expenses should be tax deductible. HMRC manual says that there will almost alway be a personal benefit to enjoying good health and therefore it doesn’t pass the “wholly and exclusive” test.
Prince v Mapp who cut his finger at work but it was later found that the surgery he had to restore function also allowed him to benefit personally in his hobby playing the guitar.
Examples of successful medical expenses claims:
There are occasionally circumstances where some of these costs may indeed be tax deductible, for example if a professional footballer injures her knee during a game.
In a specific case, the stunt rider PARSONS VS HMRC won his case for private knee surgery as it was ruled he couldn’t wait for the NHS surgery as his knee was critical to his job.
Generally though you can assume even if your injury occurs at work it is pretty unlikely you will have a legitimate claim unless you fancy a court battle with HMRC, so always talk to us or your accountant first!
What are the main medical expenses that I can claim for as a Sole Trader?
As we mentioned above, this is a pretty limited list:
Normal glasses are treated the same as injuries, for the most part if you need glasses you need them for reading a book, driving and generally seeing and therefore not just for work and cannot be claimed as a medical expense.
However, if the glasses are specialized equipment, say if you are a scientist and they are for laboratory work, or they have been prescribed specifically for VDU (visual display unit) work and most of your work is done on a VDU, then they can be treated a business expense because you are only using them for work.
An annual eye test is allowed if (like above) your work is VDU based.
Can I claim medical expenses through my Limited Company?
Yes, if you operate as a limited company, taking a directors salary, then the possibility of claiming medical expenses to reduce your tax liability are a little more flexible. Some might say even generous… certainly in comparison to the limited scope of the Sole Trader.
The following medical expenses are considered legitimate and will reduce the amount of corporation tax your limited company pays.
Annual Health Checks
A once a year medical check/health screening is a legit medical expense and a really good idea. Self-advocating for preventative health is going to become increasingly important as the NHS continues to be under extreme pressure.
An annual eye test is allowed if you are employed by your limited company, but not any subsequent prescription for glasses or contact lenses. There is an exception to this… see below…
But as with the sole trader rule, glasses are only allowed if they have been specifically prescribed for VDU work and most of your work is done on VDU.
If you are working abroad and fall ill or are injured then your medical expenses are able to be submitted. However, it’s a really good idea to also make sure you have really decent insurance for this anyway due to the potential of very high out of pocket expenses.
Or insurance related to occupational risk. This really only works for specific occupations, such as the footballer we mentioned previously. Not much wiggle room here.
Your limited company can pay for medical insurance as part of your remuneration. Woop! But it’s considered a Benefit in Kind so it is taxable via your personal tax return.
As with Medical Insurance, Gym Membership will be part of your remuneration and also a Benefit in Kind. They giveth… then they taketh away…
*So, to clarify, Medical Insurance and Gym Membership incur additional National Insurance and Benefit in Kind tax will be as you will benefit from these personally. Therefore there is rarely much tax advantage to be had from this arrangement but this can vary on a case by case basis and it’s always worth discussing with us.
The tax implications of claiming medical expenses is pretty tricky because of how many limitations HMRC place on this area and the limited scope any sole trade or business owner has to benefit from it. However, if your medical expenses are high and fall into a category that is permissible, then it’s definitely worth talking to us or your own accountant about how to proceed.
If you are investigating how to make your annual tax return more efficient then you may be interested in some of our other educational articles, such as the tax benefits of electric vehicles or how to manage the high income child benefit tax charge.
If you need help or advice about submitting medical expenses claims to best benefit your business, please get in touch.
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