How Doctors Manage Their Taxes Efficiently With Pearl Lemon Accountants
Maximising Financial Benefits Through Tax Planning for Doctors
Doctors face a heavy daily burden because people’s lives are in their hands. In addition, they have been through a gruelling process of studying, tutorials, and further studies to earn their qualification as life-savers.
Since they do such important work, they should be paid handsomely for it.
One can make up to £121,300 per year as a skilled and experienced physician in the UK. Those doctors who have been practising for at least 20 years can expect a salary of up to 143,200 GBP. An MBBS doctor’s monthly income ranges from £2,560 to 9,750.
The compensation is decent for such a challenging profession. However, the relatively low amount that goes to the doctors is primarily due to tax deductions.
Most doctors are qualified for tax relief. Despite this, doctors have a heavy workload and tight schedules, and the UK’s tax system can be hard to understand if you’re not an expert in the field.
Fortunately, tax experts can help doctors legally reduce their tax liability and keep more of their hard-earned money.
Regarding tax reliefs, doctors can turn to Pearl Lemon Accountants for advice.
Guide to Levels of Physicians
You must learn the titles and levels of doctors working in the UK. Let’s look at the hierarchy of UK doctors before we get into the income bracket of a medical professional.
Medical student
It takes undergraduate medical students five years of schooling and postgraduate medical students an additional four years to complete their education. Typically, this entails two years of classroom instruction in the fundamentals of medicine, followed by three years of clinical training on hospital wards under the supervision of consultants.
Junior Doctor
They have a medical degree, have finished their internship and residency, and have worked in a hospital for anywhere from three to eight years (depending on their speciality).
Consultant
Professionals with the title of “consultant” at the General Medical Council (GMC) have attained the highest level of expertise in their chosen field of medicine. They are responsible for the medical care of patients and the administrative management of SAS and junior doctors.
It takes between six and eight years of experience after graduating from
SAS Doctor
SAS doctors are senior physicians with long histories of service. They are doctors assigned to permanent positions. They’ve got a minimum of four years of post-graduate education, two of which were spent in their field of expertise.
General Practitioner
General practitioners are in charge of patients’ health outside of medical facilities. Their functions include diagnosing and treating patients’ health issues and referring them to specialists as appropriate.
GPs are not experts in a single field but can diagnose various conditions and advise patients on whether they need to see a specialist. They’re also in charge of keeping tabs on patients with complicated chronic diseases.
Academic Doctor
Academic doctors usually divide their time between academic duties such as teaching and research and clinical duties such as providing specialised treatment to patients. They conduct research to further medical science and can be any level of doctor, from medical student to consultant, general practitioner, or SAS Doctor.
Salary Bracket for Doctors
When we handle clients from the medical field, we understand that there are different remunerations for each type of medical professional. Doctors, specifically, have different payouts depending on certain factors.
The salary of a doctor depends on two factors:
- Your rank or level as a doctor. We analyse the available and most effective tax strategies suitable for each bracket above. Thus, each client we face will need to have a background check.
- Your working pattern. Is it a shift-based job, or will you have to work overnights or longer shifts occasionally? Or is it just the standard work week? The frequency of your paid days matters to us.
Other Things You Need To Know
Taxes and Deductions
Your income tax, National Insurance (NI), and NHS Pension will be withheld from your paycheck before you receive the rest if you are employed under an NHS trust under a fixed-term contract. You may have heard of this as PAYE (pay as you earn).
Income Tax
You should use the tax code 1250L if you have a fixed-term contract with an NHS trust. Before setting up payroll, make sure you have a P46 form to fill out; otherwise, you will be taxed at the Basic Rate without a personal allowance. If you aren’t aware of this, you won’t be able to determine whether or not your salary is accurate.
National Insurance
Both employees and employers contribute to the national insurance system. Your company will deduct money from your paycheck to pay for your contribution.
NHS Pension
Anyone directly employed by the NHS between the ages of 16 and 75 is eligible to enrol in the scheme. Surgeons, dentists, and optometrists, as well as students and residents, are included.
Ways to Reduce Tax for Doctors
Following these three tips can lower your tax liability and maximise your income.
Check your tax code
Doctors often make tax code blunders. For example, when we change jobs, we often receive a pay stub from our former and new employers.
This can make the Internal Revenue Service assume that we are incorrectly receiving payment for two employments. That’s why checking your tax code is an essential routine for doctors.
Claim Tax-Deductible Expenses
If you’re a doctor who works independently, you can deduct some of your business costs from your tax liability. Many doctors have no idea what costs they can get compensated for.
Moreover, while we routinely deduct significant expenses like medical indemnity, we frequently fail to do so for smaller, more routine expenditures incurred during our jobs. Train tickets, parking passes, stationary, and medical equipment are a few examples.
Financial Planning
Maintaining an accurate accounting of your income, pension contributions, and spending is crucial for your financial security.
You must keep these documents under the HMRC’s requirements for at least five years. It would be wise to consult an experienced financial adviser and consider investing in income protection.
If you keep your expenses on spreadsheets or in stacks of paper receipts, you might be one of the many individuals who leave out a significant amount of their expenditures.
The best move is to seek the advice of an expert who can help you with financial planning. Pearl Lemon Accountants is where you’ll find ethical and reliable tax accountants.
Contact us today.
The Services We Offer
Check out more of the services we offer at Pearl Lemon Accountants.
Corporate Tax Services
Our corporate tax services will cut your company’s tax liability to the absolute minimum. Specifically, Pearl Lemon Accountants’ tax services are distinctive by their priority on empowering and educating clients to make the most of available technological tools to boost efficiency and streamline processes.
Payroll Services
By contracting Pearl Lemon Accountants to handle your payroll services, your personnel will be free to focus on more strategic endeavours. At the same time, we take care of all the necessary payroll and pension management responsibilities and comply with all applicable regulations.
Personal Tax Services
You can get where you want to go in life professionally and personally while still meeting your tax responsibilities with the help of Pearl Lemon Accountants. Our services cover every area of personal tax preparation, including tax planning and investment.
Hiring an expert financial adviser is a smart move for medical professionals. A trusted accounting services provider, such as Pearl Lemon Accountants, can help doctors maintain a healthy work-life balance.
Pearl Lemon Accountants Handle Tax Plans for Medical Professionals
Most medical professionals should consider tax planning strategies to lower or even eliminate their taxes.
Although several tax-saving strategies are available, many financial professionals, insurance professionals, and estate planning professionals only use the most basic of these strategies.
Furthermore, a tax planning specialist for doctors can reduce taxable income, reduce overall tax rates, and help doctors take advantage of tax incentives.
And that tax planning specialist can be found right here with us.
So what are you waiting for?
FAQs
How much of a tax deduction do medical professionals get?
Some professional costs, like membership dues to the GMC, BMA, MDU, MPS, and Royal College, and examination fees, may be eligible for a tax refund of up to 45% for junior doctors.
What does PAYE System mean?
This is the procedure by which your employer or pension provider deducts your Income Tax and National Insurance payments before distributing your salary or pension. Your employer will deduct the appropriate amount based on the tax code.
What is NHS?
The acronym NHS refers to the United Kingdom’s National Health Service. This denotes the free or low-cost health care and medical services the government provides to all UK residents.
Here at Pearl Lemon Accountants, we offer the services that best suit gamblers such as yourself.
So what are you waiting for? Book a call now.