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Wholly, exclusively and necessarily

The income received by a practitioner is commonly a mixture of employment income and income from a profession. The separation of the income streams is crucial to the correct analysis of allowable expenses, as the criteria for the tax deduction of expenses differs crucially for the two income streams.

The basis for an allowable deduction relating to an employment of a doctor comes from ITEPA 2003, s 336. This states that:

“(1) The general rule is that a deduction from earnings is allowed for an amount if -

(a) the employee is obliged to incur and pay it as holder of the employment, and

(b) the amount is incurred wholly, exclusively and necessarily in the performance of the duties of the employment”

The practitioner must be necessarily obliged to incur the expense in their role as an employee. This test does not differ from any other employment, so the treatment of doctors and dentists as regards employment expenses is no different than to any employee.

The restrictive conditions