A decade of below inflation pay awards means some doctors have experienced a pay cut of up to 30% in the last 10 years.
So here are 5 tax saving tips for doctors from Dr Ed Cantelo, who is not only a GP but also a Chartered Accountant and Medics’ Money co-founder.
Claim a tax rebate – estimated tax saving: £2,262
Claiming a doctors’ tax rebate is a great tax saving tip for doctors that can reduce the costs that doctors have to pay on tax deductible expenses such as exams, GMC fees, Royal College fees (inter alia) by up to 45%.
Our Medics’ Money tax rebate guide has been downloaded by over 30,000 doctors and tells you everything you need to know to claim yourself, for free online today.
Download our free guide here! Also, our podcast contains loads of tax saving tips for doctors. Listen to our podcast!
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Check your tax code
A big tax saving tip for doctors is to check your tax code. As we switch jobs in, say, August we will usually receive a payslip from our old employer and our new employer, confusing HMRC into thinking that we are working 2 jobs and applying the wrong tax code. Luckily we’ve made a free step by step guide to sorting out your tax code. Here’s our guide to checking if your tax code is correct.
Claim travel and relocation expenses – estimated value £10,000
Another tax saving strategy for doctors is that you may be able to claim up to £10,000 relocation expenses if you have to move in order to advance your training, HMRC should allow up to £8,000 of this to be exempt from tax and National Insurance.
The guiding principle here is that absolutely no one should be at a financial detriment due to moving and working for rotations.
Here are some costs that you may be able to claim for, according to the BMA (2022):
- “The search for accommodation in the new area”
- “The purchase and sale of property (including legal fees and stamp duty)”
- “Removal of furniture and effects”
- “Continuing commitments in the old area”
- “General or miscellaneous removal costs”
- “Additional housing costs in the new area”
- “Additional or excess travelling costs, so that junior doctors do not have additional travel costs associated with moving to a new post”
This document explains more.
Get tax-free childcare and claim child benefit
You may be able to claim child benefit for each child you’re responsible for. If your income exceeds £50,000 per year you’ll receive a reduced amount and will need to complete Self assessment; if your income exceeds £60,000 you will need to tell HMRC immediately. Somewhat bizarrely, if one parent earns £61,000 per year and the other earns nothing (total household income £61,000) you can’t claim but if both parents earn £49,999 or less (total household income £99,998) you can claim the full amount. The whole claiming process can be completed online. Details how to claim it here.
We have a podcast on tax tips for doctors with children here.
Tax free childcare can be a great tax saving for doctors with kids. The amount you can get depends on your individual circumstances and the childcare choices website is a handy way to see what’s available here.
Make sure you don’t pay too much national insurance
If you have multiple employments e.g. you locum for different trusts then you may be overpaying your National Insurance Contributions. This is because you should pay National Insurance at 10% (from 6 January 2024 – note that the rate was 12% before this) on your employment income from £12,570 and £50,270 and 2% over £50,270; however if you have multiple salaries you may end up paying too much at the 10% rate when you should be paying the 2% rate. Although strictly speaking National Insurance is not a tax, it is one for all intents and purposes and so there is a possibility to save tax (or prevent overpaying tax) by keeping an eye on your National Insurance bill.
What medical school didn’t teach us about money
“What medical school didn’t teach us about money” will give doctors a step by step plan to transforming your financial future. Enter your details to download your copy now
