Tel: 01403 780 770

Building and protecting your wealth

Tax Thresholds for Doctors

Calculating taxes

How much income tax you pay depends on a few things: how much of your income is above your personal allowance, how much of it falls within each tax band, and if the income you make is tax-free or not. Understanding exactly how much income tax you pay and how much money you’ll actually take home each month is crucial.

This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice. 

Here’s an overview of the various income thresholds and what tax liabilities you might need to worry about this upcoming tax year.

Income Tax Rates and Bands

If you’re a medic using PAYE then you’ll be able to see how much tax is being taken, but you might not know the exact rates you’re paying.

 No matter which tax band you ultimately end up in, everyone that earns less than £125,000 gets a £12,500 personal allowance of income that isn’t taxed. After that, the basic rate of tax, a 20% tax rate, applies up to £50,000. The higher rate spans from £50,001 to £150,000 and your income in that band is taxed at 40%. Finally, the additional rate, 45% tax rate, applies to any income over £150,000.

There are a number of income thresholds that will impact your effective tax rate such as:

  • The first £1,000 of self-employed income (There is an automatic £1,000 trading allowance that can alternatively be used instead of claiming specific expenses.)
  • The first £1,000 of property rental income – like the trading allowance, if expenses are less than £1,000, the allowance can be claimed instead.
  • The first £2,000 of dividends are taxable at 0%
  • The first £1,000 of savings income for a basic rate taxpayer, or £500 for a higher rate taxpayer is taxable at 0% (if you are a 45% taxpayer then all savings are taxed)

Other ways to reduce tax

Besides the above, there are other deductions you can employ to help lower the amount of tax you pay – National Insurance Contributions, Student Loan repayments, superannuation contributions, and tier rates are just a few ways to reduce taxable income or extend the basic rate band.

There are a variety of tax relief schemes you could take advantage of as well. Pension contributions, charity donations, maintenance payments, relief for business expenses (whether it is your own company or if you’re employed and using your own money for business purposes) will all provide you tax relief. Some apply automatically, but others you will need to apply for, so it might pay to seek out an expert.

How much could you save?

Professional advice is always advisable, but especially if you think you might be close to any of the limits. If anything can be done to bring down your taxable income or if you want your tax liability explained, a specialist accountant and IFA can help.

If you’re ready to save as much money as possible then schedule some time to meet with us today. In conjunction with a specialist accountant, we can help ensure you only pay the tax you should be paying and keep more money in your pocket. Contact us today.

DMFS Guide - Getting Finances in Order

Want to build & protect your wealth?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


Follow us on for regular financial and mortgage updates

Twitter                     LinkedIn

If you found this article interesting, why not share it?


Meet the Advisers

With over 20 years experience our advisors can help you meet your business and personal goals.

Who we Help

All our clients are doctors and dentists, just like you. As specialists we know your industry inside out.

Info & News

Make this the place you visit to keep up to speed with financial news for your sector.

Contact Us

Wherever you are in the UK we can help you build and protect your wealth.

Get Connected

to our specialist team

Tel: 01403 780 770

Keep Updated

Simply register your name and email below and receive our updates direct to your inbox

Dental & Medical Financial Services News Updates

Just for doctors and dentists

Read more news


Dental and Medical Financial Services is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority. Company registered in England no. 9158580 Registered office: 1 Market Square, Horsham, West Sussex, RH12 1EU

© 2014 Dental & medical Financial Services. All rights reserved. Website design by Goldmine Media.