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Understanding Tax Relief on Surgery Costs for Self-Employed Business Owners

Tax

Client Situation

A client who is a social media influencer has incurred significant costs for both back and cosmetic surgeries. She argues that the cosmetic surgery is necessary for her industry and the back surgery is needed to enable her to sit for extended periods during video shoots. How should these expenses be treated for tax purposes?

General Principles

First, it is crucial to determine the purpose of the expenditure. The key question is: what is the taxpayer’s motive for the surgeries? If the expenditure is incurred solely for business reasons, then it may qualify as an allowable expense under the “wholly and exclusively” test. However, if the expenditure serves dual purposes (both personal and business), it is unlikely to be deductible.

Back Surgery

According to HMRC, medical expenses aimed at ensuring or restoring good health generally have a dual purpose—both personal and business—making them non-deductible. However, there are exceptions. For example, in the Parsons case, a stuntman successfully claimed the cost of a private knee operation and other treatments as business expenses, as they were deemed necessary to return to work quickly.

Cosmetic Surgery

Cosmetic surgery costs are more complicated. HMRC guidance states that if the purpose of cosmetic surgery includes a personal desire to improve appearance, it is unlikely to be deductible. The case of Daniels, where a dancer successfully claimed expenses for various beauty treatments, suggests that if there is compelling evidence that the expenditure is solely for business purposes, it might be allowable.

Summary

Determining the tax treatment of surgery costs is not always straightforward. Business owners should assess whether the expenses are incurred wholly and exclusively for the business (if there is a dual purpose, the expense is not deductible) and should carefully document the reasons for the expenditure so evidence can be provided to HMRC if challenged.

As is always the case, tax advice cannot be taken soon enough, so please contact your usual Dixcart contact to discuss each specific case: hello@dixcartuk.com.


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The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute accounting, legal or tax advice. Professional advice should be obtained before taking or refraining from any action as a result of the contents of this document.


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