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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Doctors and dentists: receipts: cremation fees paid direct to charities

Before a deceased person can be cremated, two certificates stating the cause of death have to be signed, one by the doctor who attended the deceased before death, and the other by a doctor of at least five years’ standing. Normally the undertaker arranges for the certificates to be signed and pays a fee (often known as `ash cash’) to the two doctors. The amount of the fee is then included in the charge which the undertaker makes to the deceased person’s estate.

Doctors entitled to such fees often arrange for them to be paid to medical charities. After representations from the British Medical Association, HMRC clarified that the situation regarding such donated fees is as follows:

  • Doctors who are taxed on a self-employed basis are taxable on their cremation fees. This is because they are carrying on a profession and the rules for computing their profits lay down that all fees earned must be brought into account. This is the case even where some of these are not received by them because they have arranged for the payers to remit the amounts due directly to a medical charity. There is no room for any concession on this point.
  • Doctors who are not taxed on a self-employed basis should treat cremation fees as receipts of miscellaneous income. Income Tax is computed on the full amount of profit or gains arising. A profit is not regarded as arising until it is received. Where the doctor does not receive the payment, with it being made directly to a charity instead, the payment is not liable to tax as miscellaneous income.

CTISA (Technical) should be consulted before it is accepted that medical fees are not taxable in other circumstances.