As another tax year comes to an end on 5 April 2026, Ed (a GP but also a chartered accountant and chartered tax adviser) goes through ten things to think about ASAP before this happens:
1. Claim a tax rebate for 2021/2022 before you lose it
Make sure you have claimed a tax rebate for the 2021-22 tax year. You can claim tax relief on your professional expenses for the current tax year and the previous four tax years. Currently you can claim for all expenses from 6 April 2021. However, once we reach 6 April 2026 you will lose the ability to make a claim for any allowable employment expenses incurred between 6 April 2021 and 5 April 2022.
So, if you did incur such expenses and have not made a claim then don’t miss out – make that claim asap! You can use the Medics’ Money free step by step guide to do this and can find it here: https://medicsmoney.co.uk/free-guide/
2. Maximise your ISA allowance (if you can!)
Maximise your ISA allowance if you can. Don’t forget you can save up to £20,000 each tax year in ISAs which can be cash ISAs or stocks and shares ISAs and up to £4,000 of the £20,000 allowance can also be invested in a Lifetime ISA if applicable (see below).
Any income from interest or dividends will be tax free if within an ISA; and any capital gains in an ISA will be free from Capital Gains Tax (“CGT”). With recent reductions in the tax-free dividend allowance, the tax-free allowance for CGT, and increases to the CGT rates and dividend rates (the latter from next year) it is even more important to use ISAs as tax free wrappers where you can. You have until 5 April 2026 to use what you can of the £20,000 ISA allowance for 2025/2026. From 6 April 2026 a new £20,000 allowance will be available. Changes to Cash ISAs are coming for the under 65s but not until April 2027.
And don’t forget the Lifetime ISA or LISA – the Government will pay 25 pence for every £1 you put into your LISA up to a maximum of £1,000 if you put £4,000 in. If you turn 40 this year, make sure you set up a LISA if you want to do so – by the time you reach your 40th birthday you lose the opportunity.
For more information on ISAs, you can read our blog all about them: https://medicsmoney.co.uk/isas-individual-savings-accounts-for-doctors/
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3. Should you transfer assets to your spouse or civil partner?
Is there scope for transfers to a lower paid spouse or civil partner? You can transfer assets from one spouse (or civil partner) to the other with no CGT or Inheritance Tax (IHT) consequences. If one spouse pays income tax at a lower tax rate than the other, is there scope to transfer any income generating assets such that the income generated is taxed at a lower rate? If you do have assets generating taxable interest, dividends or capital gains (e.g. those not already inside an ISA) then tax savings can be had if the lower taxed spouse pays tax on the income instead of the higher taxed spouse.
4. Make sure you know your Adjusted Net Income!
Consider your Adjusted Net Income for the tax year and the impact on your marginal rate of taxation. Is your Adjusted Net Income (essentially your taxable income (this would include any employment income after your NHS pension and professional expenses) less grossed up Gift Aid contributions and Personal Pension Contributions) exceeds £100,000 you start to lose your personal allowance resulting a marginal tax rate of 60%, or 67.5% in Scotland, in what is known as the marginal rate tax trap. You also lose any tax-free childcare if you are claiming this as soon as you go a penny over £100,000. In England and Wales, you could also lose entitlement to up to 30 free childcare hours per week if your adjusted net income exceeds £100,000
So, what is your adjusted net income? Are you getting close to £100,000 or just above it? If so, consider this carefully and if you can / want to do something about it. For more on the marginal tax trap and how to avoid it, check out this blog: https://medicsmoney.co.uk/how-nhs-doctors-can-avoid-the-60-tax-trap/
5. Consider the impact of pay uplifts on the pensions’ Annual Allowance
With recent pay uplifts the pensions annual allowance will impact a lot more senior doctors in the 2025-26 tax year. If your income from all sources less pension contributions is going to be over £200,000 then you may have a tapered annual allowance. With time running out there may not be a lot that can be done but for anyone close to the £200,000 level it may be worth checking your numbers and discussing strategy options with your accountant / financial advisor.
6. Do you have a private limited company? If so, can you pay out a dividend before the year end?
While this will not be relevant for many doctors, for those with a private limited company providing services you may want to consider paying out a dividend before the tax year end if you are able to. Firstly, you will utilise the tax-free dividend allowance of £500 (if not already used). Secondly, from 6 April 2026, the tax rates applied to dividends are increasing by 2% for basic (from 8.75% to 10.75%) and higher rate taxpayers (from 33.75% to 35.75%) so there will be a 2% tax saving for dividends paid before 6 April 2026. There is no change to the dividend additional rate for additional higher rate taxpayers which remains at 39.35%.
Be mindful though of the impact a dividend might have on your marginal tax rate and pensions’ Annual Allowance (See points 4 and 5 above!!)
7.Utilise the Capital Gains Tax Annual Allowance if applicable
In the 2025-26 tax year, the CGT tax free Annual Allowance is £3,000. If you have any shares sitting at a capital gain that will be subject to CGT, that you intend to sell, then consider selling some of the shares before 6 April 2026 and some after to use the 2025/26 Annual Allowance before you lose it. Of course this may not be easy to do, many assets are not liable to CGT anyway (including shares in ISAs) and you should only sell an asset if you want or need to (not because of tax), but it is something to think about.
8.The Inheritance Tax Annual Exemption
If you are at the stage where you are considering the IHT liabilities that your loved ones may pay when you pass away, make sure you utilise your yearly annual exemption of £3,000. You can also use the Annual Exemption from the tax year before if not already used. You can find out more on IHT here:
9. Get ready for “Making Tax Digital” if applicable
Making Tax Digital (“MDT”) for income tax starts to come into effect from 6 April 2026. Initially it affects sole traders and landlords with an annual turnover of more than £50,000 – if this is you, you need to get up to speed on the new requirements ASAP! You can find more information here: https://medicsmoney.co.uk/making-tax-digital-what-doctors-need-to-do/
