Diligent use of receipts can ease the pain of expenses

Many taxpayers may not be aware of the benefits to be gained by being more diligent about keeping medical and dental receipts? For Mr J from Glenageary it could be worth over £1,000 in income tax relief. It has not been a particularly good year for Mr J, who is in his 30s and a computer consultant. Last February he went skiing in Italy with his wife and another couple. A particularly bad fall resulted in a serious back wrench and muscle bruising. Not serious enough for hospitalisation, but serious enough to require frequent visits to his doctor, an orthopaedic consultant and a physiotherapist. He was put on a series of muscle relaxant tablets. His consultant then prescribed a special orthopaedic bed which cost nearly £1,000. His total outlay between March and now has amounted to about £1,500. Last month, a tooth broke and Mr J's dentist decided he needed a root canal and crown, the total cost of which is £750. Luckily enough, Mr J's wife was perfectly healthy this year because their total medical/dental outlay since the beginning of 1997 is £2,250. Rather surprisingly, Mr J never bothered to take out VHI or BUPA after he left full-time employment (his employer paid his premiums - he plans to do so now), but even if he had, neither company would cover the cost of his dental treatment or the orthopaedic bed. In the case of GP visits he could have claimed up to £10 per visit with VHI and up to £15 per visit with BUPA and up to £30 for a consultant's visit if he was with VHI and up to £40 if he was with BUPA. VHI allows up to £10 per visit for a physiotherapist and up to £15 per visit at BUPA. However, in both cases the amount he can claim is subject to an excess - the first £250 for VHI and £200 for BUPA (the family excess is £400 for VHI and £375 for BUPA).

Because he does not have private medical insurance, the only way Mr J can reduce some of his medical/dental costs is to claim these expenses as income tax relief. The Revenue Commissioners is quite generous about which medical or dental conditions are allowable at the top tax rate of 48 per cent. The excess it applies is just £100 for an individual and £200 in the case of two people or more. It will not permit any refunds for any claims that have been or will be reimbursed by private health insurance. Revised only last July, the following is a list of the medical items or treatments prescribed by a doctor, which qualify for medical expenses relief:

Drugs and medicines;

Hearing aid;

Orthopaedic beds/chairs;

Wheelchair/wheelchair lift;

Glucometer machine for a diabetic;

Engaging a qualified nurse in the case of a serious illness;

Physiotherapy or similar treatment;

Kidney patients expenses up to a maximum amount depending on whether the patient uses hospital dialysis, home dialysis or CAPD;

Certain items of expenditure relating to child cancer patients;

Maintenance in hospital or approved nursing home.

Routine eye treatments, including testing and spectacles, are not covered, nor is routine maternity treatment, in or out of hospital.

On the dental side, relief is given for the more expensive procedures such as:

Crowns, veneers. Rembrandttype etched fillings (a form of crown);

Tip replacing.

Gold posts, inlays;

Root canal treatment;

Periodontal treatment such as root planing, currettage and debridgement, gum flaps, chrome cobalt splints;

Orthodontic treatment such as braces;

Extraction of wisdom teeth;

Bridgework.

The procedure for claiming medical or dental treatment is quite simple and involves filling out what is known as form MED 1, available from the Revenue Commissioners or your accountant for medical expenses and form MED 2, which is available from your dentist. You can only claim for receipted expenses - which is why you should always keep prescription dockets and ask for a receipt from your GP for every visit (consultants always provide receipts). MED forms should be filled in at the end of the tax year and sent in after April 5th. Self-employed people who use the services of an accountant should include MEDs with all their other expenses in order that they can be taken into account as part of their preliminary tax liability on November 1st and adjusted, if necessary for the submitting of tax returns in January.

According to the Revenue Commissioners, you can choose whether to take the relief for the year in which the payments were made or for the year in which the expenses occurred. In our reader's case, all his treatment and expenses have been incurred in the same year, but had Mr J only paid for his dental treatment next year, he could have claimed say, the £1,500 for his medical expenses, minus the first £100 in the 1997 tax year and the £750 dental costs, minus £100 in the 1998 tax year. In effect, however, he would be paying an extra £100 excess for medical treatment that was relevant to a single year and so should probably try and pay the total amount in the same tax period.

The Revenue Commissioners does not require that medical expenses are claimed on a tax year basis: you can choose instead to opt for a calendar year, the VHI/BUPA year if you happen to have expenses over and above those refundable by your private insurer, "or any other period so long as the period selected is used consistently every year". If you opt for the calendar year, details submitted every year must be for the period January 1st to December 31st.

Mr J, who is opting to claim his medical expenses in the calendar year can expect tax relief of £1,032 for all his troubles, i.e. £2,250 - £100 (excess) £2,150 48 per cent, assuming of course that he does not incur any more expenses before the end of the calendar year.

(A booklet, Medical Expenses Relief is available free from The Revenue Commissioners by calling (01) 878 0000.