What will be your biggest expense in life? Mortgage? Household bills? Transport costs? Holidays?
No, it’s likely your biggest expense will be the total in taxes you pay to the government.
Thanks to progressive taxation rates, the more you earn, the more tax you pay. Whilst HMRC will chase you if they think you owe tax, unsurprisingly they rarely chase you if they think you could pay less tax. Below are several examples of how doctors regularly pay too much tax. Remember if you do nothing about negotiating your tax bill you are likely to pay too much tax. You are effectively making charitable donations to HMRC! Here’s 5 ways to stop paying too much tax:
Reduce your tax bill by up to 45%
Unfortunately, it’s common for doctors to pay too much tax. If you do nothing proactive about tax the chances are you will overpay. The government are not going to remind you to claim a tax rebate worth thousands on the cost of GMC, Royal College exam fees. Our free tax rebate guide has been downloaded by over 30,000 doctors and supports you to claim these valuable tax reliefs yourself, for free.
It’s not just for Junior doctors, it also vital for consultants and GPs to claim all allowable expenses. This helps to reduce your threshold income (see pension section) and avoid the 60% income tax trap.
Is your tax code correct?
What is your tax code and why is it important? Unfortunately, frequent job rotations combined with NHS Payroll and HMRC can lead to incorrect tax codes which means you pay the wrong amount of tax. Our guide explains the anatomy of your tax code and how to make sure its correct. Your own tax code online. No long calls to HMRC and no need for an accountant.
Are you paying too much national insurance?
If you are a locum or have multiple employments in one year, have you paid too much national insurance?
Tax efficient working for higher earners?
If you are a higher earner, do you understand your marginal rate of tax? Just how much will you take home from doing that overtime? Why might your marginal rate of tax be >60% despite the maximum rate of income tax being 45% (46% in Scotland).
Can a limited company save you tax?
Operating as a limited company is often thought to be tax efficient. It can be, but not always and it’s important to consider your own personal circumstances.
Got kids – tax free childcare and child benefit explained
As parents ourselves we know how expensive childcare can be. But there are several ways to reduce this cost tax efficiently.