Hospital Pharmacist
Vol 9 No 1 p2
January 2002

Do you understand your tax return?

By Caroline Williams, MSc, MRPharmS

The difference in pay between hospital and community pharmacists has been the subject of much recent debate. Some hospital pharmacists, especially juniors, work as community locums at weekends or in the evenings to earn extra money. This extra money is not taxed at source and therefore these pharmacists need to complete a tax return. Pharmacists who do community locums can find themselves floundering under the complexities presented by a tax return.

The Royal Pharmaceutical Society's (RPSGB) retention fee is compulsory in order for pharmacists to work and, as such, can be offset against tax. This is not something that is widely publicised and, as I have learnt from experience, it can be several years after qualification that overpaid tax is finally returned. Some community pharmacists have their fees paid for by their employer and therefore cannot claim back the overpaid tax. In addition, membership fees from some pharmacy associations, such as the United Kingdom Clinical Pharmacy Association (UKCPA), may be offset against tax.

I wanted to establish if I was alone in not knowing that professional fees could be set against tax. I designed a questionnaire to assess pharmacists' knowledge of tax deductible items. The questionnaire also asked whether or not the pharmacists completed tax returns and if they had received any training or professional advice in this area, either at university or at their base hospitals. The year of qualification and university attended were recorded to see if teaching about tax issues had been given by any of the universities and, if so, in which year the teaching had started. The questionnaire was sent to hospital pharmacists at three district general hospitals and one local teaching hospital.

Results

The questionnaire resulted in 40 replies which were received from pharmacists with a range of grades who had registered between 1973 and 2000. The number of respondents at each grade are shown in the Table.

Between them, the 40 pharmacists had attended all the UK schools of pharmacy except that at Sunderland. No pharmacists had trained overseas.

A tax return had been completed by 22 (55 per cent) pharmacists at some time. Of these, only one had received any specific training, and this was from a family member. Six pharmacists (15 per cent) had sought professional advice from an accountant on tax deductible items. Four of them had paid an accountant and two had consulted an accountant who was a family member or friend.

No pharmacist had ever received any training on tax or tax returns from their university or hospital employers.

Of the respondents, 35 (87.5 per cent) pharmacists were aware that the RPSGB retention fee could be offset against tax, twelve (30 per cent) knew that union membership, for example, of the MSF, may be tax deductible in some circumstances and nine (22.5 per cent) knew UKCPA membership could be offset against tax. Some pharmacists doing regular community locums were claiming for other items such as laundry, petrol, phone calls and car expenses.

Discussion

This short questionnaire demonstrates that hospital pharmacists have a gap in their knowledge which leads to them paying too much tax. A significant proportion, 12.5 per cent, of hospital pharmacists in this survey were unaware that RPSGB fees could be offset against tax. The Society currently has 6,681 pharmacists listed as working in hospitals. If these figures were representative of the whole country, 835 pharmacists would be losing money which would be part of their personal tax allowance; together, they would pay more than £25,000 too much tax each year. Some pharmacists had not offset their fees against tax, even when they were aware they could, as they did not wish to complete a tax return. This is a misconception and it can be done by writing a letter to the local tax office. Tax returns are necessary to declare additional earnings such as locum work.

Clearly, training is needed in this area. The question is: who is best placed to provide it? Final-year students could receive a one-off session at university detailing important tax issues. Alternatively, hospital pre-registration students could receive a regional training session before to qualification. The information would probably be of most use at this time, as pharmacists usually know which job they will be undertaking after qualification. Qualified pharmacists could receive training in a similar way to junior doctors, who periodically have access to financial advice during their weekly lunch-time training sessions. With more and more pharmacists taking some time out and working abroad, tax advice about managing oversees work payments may need to be added in to the pre-registration training.

Conclusion

None of the hospital pharmacists surveyed had ever received any training on tax matters or tax returns from either their university or hospital employers. The recent increase in the length of the undergraduate course may provide the opportunity for a general undergraduate session to be given. Regional pre-registration course organisers should ensure that this area of training is offered to avoid financially disadvantaging newly qualified hospital pharmacists.

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Ms Williams is senior pharmacist, Elderly Care NSF, Southampton University Hospital Trust, Southampton