Optician? It’s time to take a look at your tax responsibilities, business record keeping skills and understand some of the tax reliefs that you could be entitled to.
Whether you are self employed or operating a limited company, you will be liable for tax. If you are a self employed you will need to complete a self assessment tax return before 31st Jan each year (for the previous tax year), pay any tax due and make two payments on account per year: Jan 31st and July 31st.
If you are operating a limited company, you will need to file annual accounts and submit a tax return (9-months after your year end). In both cases, your taxable profit is calculated as your income less any allowable expenses.
There are two types of expenses; Allowable and Disallowable. Allowable business expenses are items you have purchased for the purpose of your trade only – things you need to do your job and make a living. As these have the effect of reducing your tax liability, it is important to ensure you maintain good records and keep any receipts to act as proof of purchase. Disallowable expenses are items which may have been purchased for private or have dual use. These cannot be claimed against your annual tax bill, and the most common area where there is business and private use is with a car, in respect of mileage.
Our network of accountants recommend that if you are unsure whether or not an expense is tax deductible, keep hold of a receipt and discuss it with them once the time comes to begin preparing your end of year business accounts or completing self assessment.
Most opticians can claim tax relief on a variety of business expenses, but many are either confused, too busy or unaware of their entitlement and so do not make a claim. Unfortunately the end result is often an overpaid tax bill!
If you’re an optician you could be liable for tax relief on expenses such as:
Membership fees
Your subscriptions to any governing bodies such as the General Optical Council, Association of Optometrists and Association of British Dispensing Opticians subscriptions. Industry magazine subscriptions are also fine.
Sales & marketing material
Items such as business cards, leaflets and web-based marketing are deemed allowable expenses.
Postage
You may want to send yearly eye test promotions/reminder to your clients via post. No matter how many you post, keep the receipt for the stamps you baught because it all counts towards reducing your tax bill.
Legal & Professional Fees
Costs of running your business, such as business planning, financial management and accountants fees are again deductible. If your accountant completes your return on your behalf he/she should include these themself!
Insurance
As part of your profession, you might want to purchase insurance for things such as stock protection, contents and fittings, cash cover, business interruption and personal liability insurance. The cost of such insurances is allowable against your tax bill.
Courses & Training
It is essential that eye care practitioners keep up to date skills and knowledge required to practise safely throughout their career. CET is a requirement for all fully-qualified dispensing opticians. This means that from time-to-time you will need to attend courses for continued education and training. These costs are claimable.
Workwear & Equipment
While items such as your sunglasses and coat that you wear to and from work are disallowable business expenses, workwear, optical products, dispensing tools are allowable.
Mileage & Travel
Mileage and travel is often a grey area. In some cases, you may be able to claim the cost of travel or mileage when traveling for work. Mileage is currently claimed at 45p per mile for the first 10,000 miles and 25p thereafter. We advise you seek advice from your accountant to establish whether or not you can claim for this against your tax. Keep a log of any trips, including time, date, distances and a note of who you were visiting.
Remember, always seek the advice of a fully qualified accountant to ensure your expenses are allowable before submitting your tax return by yourself.
