HMRC internal manual

Business Income Manual

BIM54010 - Doctors and dentists: receipts

General medical practitioners enter into a contract for General Medical Services (GMS). This provides them with earnings and reimbursement of expenses based on several factors. These factors are detailed in the Statement of Financial Entitlements (SFE).

This will include the elements relating to:

  • capitation (number of patients on the practice’s list),
  • performance, and
  • specific expenses.

Doctors and dentists primarily receive a base payment based on the number of patients on their list.

The performance element provides for specific services which conform with the Quality and Outcomes Framework (QOF). There are generally two types of performance payment: Achievement Payments and Aspiration Payments.

Specific expenses will include payments for:

  • rent and rates on practice accommodation,
  • locums employed to cover maternity, paternity or sickness leave,
  • seniority rates,
  • dispensing,
  • flexible care scheme,
  • supervision fees, and
  • inducement payments.

These allowances are also treated as income from a profession or a vocation. However, there will typically be a corresponding expense which is treated as an allowable expense.

Where the practitioner owns the premises, payment is based on a notional commercial rent. Where the premises are used partly for professional and partly for private purposes, a rental allowance is payable based on the District Valuer’s apportionment of the gross rateable value as between professional and private accommodation.

From 1980, doctors contracted to the National Health Service may sell certain surgery premises to the General Practitioners Finance Corporation and lease them back at a rent based on the cost of the premises. This rent may exceed a commercial rent, in which event the transaction would fall within the scope of the sale and leaseback rules in Part12A ITA 2007 and Part19 CTA 2010 (BIM61300 onwards). Since, however, rents paid are substantially reimbursed and such reimbursements are treated as practice receipts, any rent disallowed under the sale and lease-back rules would in effect be doubly taxed unless some adjustments were made. In order to avoid the need for such adjustments, the sale and lease-back rules should not be invoked in such cases.