This article is written as a guide for self-employed dentists to claim tax relief on their training costs.
A self-employed dentist could be an associate or principal working as a sole trader, partnership, or limited liability partnership. Self-employed dentists do not include a dentist who is a director in their own company or a dentist employed under a contract and on PAYE payroll. Directors and employees have different rules for their training costs and are not considered in this article.
HMRC has recently revised the tax relief guidelines for training courses for all self-employed workers.
Per the updated guidance, training costs for a self-employed dentist acquiring new skills in any field of dentistry will qualify for a tax deduction, provided they are incurred “solely and exclusively” for any “ancillary purposes” of trading as a dentist.
The previous HMRC approach blocked tax relief for course fees that provided dentists with new expertise or knowledge, such as cosmetic dentistry. New knowledge was considered a capital expenditure, creating an enduring benefit for the dentist. This meant no tax relief for upskilling, except for dentistry refresher CPD courses.
HMRC’s new guidance acknowledges that dentists often need to participate in training to acquire updated skills and knowledge. This ensures they incorporate the latest technological advancements and industry changes into their workflows.
These changes will allow a tax deduction for all training costs for a dentist, provided they meet one of the following conditions.
- The training is related to dentistry.
- The training is aimed at enhancing skills or knowledge of dentistry.
- The training is intended to improve their performance as a dentist.
HMRC has revised BIM35660 of the Business Income Manual (BIM), which focuses on the distinction between capital and revenue about intangible assets, specifically training courses for the self-employed.
Additionally, HMRC has included examples to demonstrate the circumstances under which tax relief will or will not be applicable.
The initial set of examples comprises situations where training expenses can be considered valid for a self-employed person. The subsequent examples highlight scenarios where training expenses are unlikely to be acceptable.
Our commentary has been added to show the eligibility for tax deductions, as without any specific rule, they will vary based on each case’s particular facts and circumstances.
HMRC: ‘Training Expense likely to be allowable’
HMRC Example 1: Kiran works part-time as a wedding photographer. She wants to improve her photo editing skills, so she attends an online refresher course on using photo editing software.
SmallBiz Accounts: This example could easily be applied to a dentist looking to improve the quality of their picture editing for the Instagram page. However, HMRC has made the distinction that this was a refresher course. What if a dentist were to attend a course to learn a new software skill for using an intraoral scanner?
HMRC Example 2: Ryan is a plumber and attends a beginners’ bookkeeping course. Although the course will not help Ryan with the skills he needs as a plumber, it will teach him how to keep accurate accounting records, which will help him run his business better. The cost of the course is likely to be an allowable expense.
SmallBiz Accounts: HMRC wants all self-employed people to improve their bookkeeping skills. This course would be allowed for a dentist.
HMRC Example 3 Tim is a potter and he takes an e-commerce course and then a short, introductory course on website development. The courses are not directly related to pottery but they teach skills in online selling. The costs of the course are likely to be an allowable expense.
SmallBiz Accounts: This is the same for a dentist claiming their training costs seeking to acquire skills in website development for self-promotion to obtain online inquiries.
HMRC Example 4
Alex is a website designer and takes a course on Artificial Intelligence (AI) technology for online applications. ‘The course will give Alex new expertise in an upcoming area of technology related to her business. The costs are therefore likely to be an allowable expense.’
SmallBiz Accounts Given the potential connection between AI and dentistry, it can be assumed that most dentists can claim this type of course.
HMRC Example 5
Aditya fits gas boilers. He completes training to install heat pump systems because heat pumps are new and upcoming technology and an alternative to gas boilers. The cost of the training is likely to be allowed as an expense of his business as heat pumps will replace gas boilers and Aditya is acquiring skills to keep up to date with modern technology.
SmallBiz Accounts Dentists acquiring new skills that allow them to keep up to date with modern dental technologies such as intraoral scanners should have no problem claiming for this type of training.
HMRC Example 6
Felicity is a personal trainer. She attends a course to improve her understanding of nutrition and gains a basic qualification in nutrition. The knowledge that she gains will also help her to develop better training plans for her existing clients so the cost of the course will be an allowable expense.
SmallBiz Accounts We see similarities between this and dentists who want to develop an understanding of alternative holistic dentistry over traditional scientific dentistry. HMRC should allow claiming courses for any dentist wishing to develop a sense of holistic therapy, such as nutrition education, aromatherapy, homoeopathy, herbology, spiritual healing, hypnosis, and electroacupuncture.
HMRC Example 7
Aisha runs an online store selling children’s storybooks that she writes. She attends a beginners’ course on drawing illustrations. The cost of the course is likely to be an allowable expense because Aisha is using her skills to improve the children’s storybooks that she creates.
SmallBiz Accounts This example can be applied to a dentist who wants to attend a course on 3D printing to assist in obtaining accurate images and models of the anatomy of a patient’s teeth and jaws.
HMRC examples: ‘Training expense likely to be disallowable’
HMRC Example 8
Amari is currently unemployed but wants to become a driving instructor and start his own business. He completes a course so that he can become an approved driving instructor and wants to claim the cost of the course as an expense. Disallowed: this is to start a new business that does not already exist.
SmallBiz Accounts: No tax relief can be obtained by any self-employed dentist for their training until they have started working as a dentist. The tip is to ensure significant training costs are incurred after becoming a dentist, which can be hard in the initial training phase to becoming a dentist.
HMRC Example 9
Robert runs a sportswear shop, selling branded clothing. He enrolled in a sports science degree at his local university because he has an interest in the field and thinks it will help him to understand his customers better. The costs associated with the degree course will not be an allowable expense because the knowledge Robert acquires will not specifically help him sell sportswear. The costs are therefore unrelated to his business.
SmallBiz Accounts: This is a tough one to compare to dentistry. As dentistry is a science, any costs associated with a degree in dentistry should be allowed. For this reason, we disagree that this example can be applied to dentists.
HMRC Example 10
Simone is a freelance makeup artist and wants to move into the tattooing business and open her own tattoo studio. She undertakes several tattooing courses and wants to claim the costs as an expense. The costs of the tattooing courses were not incurred for the purpose of Simone’s existing business and are unrelated to her makeup artist business, so they are not allowed as an expense.
SmallBiz Accounts: We would like to refer this to a hygienist who wants to become a dentist. Given the crossover, we might be tempted to argue with HMRC that a hygienist is extending their skills in dentistry. Any practising hygienist could presumably use their existing skills as a dentist and work with the same patients in the same treatment room.
HMRC Example 11
Craig is a taxi driver, but he wants to change his business and move into the painting and decorating industry. He completed a painting and decorating course at his local college and wants to claim the costs of the course. The cost of the course was not incurred for the purpose of Craig’s existing taxi-driving business and is related to the painting and decorating business he plans to set up, so it is not allowed as an expense.
SmallBiz Accounts: As given in the example, if any dentist wants to start a new trade or profession, like in example 8, if they have yet to start that new business, there would be no tax relief on any training costs.
Our Summary
With expenditures on dentistry training often costing many £1,000s, this HMRC guidance update should give dentists more confidence when claiming expensive dentistry training.
It should be noted that this is only a change in HMRC’s guidance on interpreting tax law, not a change in tax law itself. Until the law changes, self-employed dentists may face challenges from HMRC related to training costs.
As shown in HMRC guidance in examples 9 and 10, there is a grey area between what HMRC would look to challenge as allowable and what we would consider permissible training.
A common-sense approach to claiming costs should see most dentists get a full deduction for their training costs. Even when challenged by HMRC, having a strong case for how the training has been applied on a day-to-day basis should allow HMRC to allow the costs for the training.
Considering HMRC’s new guidance, dentists who have previously omitted significant training costs that they feel they should have claimed after reading it may consider updating their tax returns for these costs. If this isn’t possible, a claim for overpayment relief should be considered for any of the four previous tax years.
