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Tax guides

The £100k Tax Trap for Doctors

How the personal allowance taper hits clinicians. Expert UK guide for doctors earning over £100,000 from ICAEW-regulated accountants. Updated for 2026/27.

What is the £100k tax trap?

The tax trap occurs because the £12,570 personal allowance is tapered away once adjusted net income exceeds £100,000. For every £2 earned above this limit, £1 of the allowance is lost. This results in a high effective tax rate on income within this specific bracket. Careful planning is required for doctors moving into senior roles.

Fixed fees, specialist healthcare accountants, and every HMRC and NHS Pensions deadline handled.

  • Fixed monthly fee — no surprises
  • Specialist in NHS pension and healthcare tax
  • Onboarding within 48 hours
Get my fixed-fee quoteBook a free 15-min tax review
  • ICAEW & ACCA regulated
  • 5,000+ clients served by ACCOTAX
  • Specialist healthcare accountants

Reviewed by Waqas Sagar ACA FCCA FMAAT, Founder of ACCOTAX, 18+ years' experience · Last reviewed: 8 October 2026 · Updated for the 2026/27 tax year

Medical.Accountants by ACCOTAX, ICAEW/ACCA-regulated chartered accountants, London, serving clients across the UK. Over 5,000 clients served.

Key takeaways

  • For 2026/27 the standard annual allowance is £60,000.
  • Care and staffing businesses depend on accurate payroll, minimum wage compliance including travel time, auto-enrolment and VAT exemption conditions that hinge on regulation.

Free guide: The Doctor's Tax & NHS Pension Handbook 2026/27

Get the free guide

Which accountancy support fits your income?

Start with how you are paid. Different income sources can need different accounts, returns and expense checks.

How you workWhat we checkSupport to explore
Employed or umbrella (PAYE)Tax codes, eligible employment expenses and whether a tax return is needed.Healthcare tax refund support
Genuinely self-employedBusiness income and expenses, Self Assessment and MTD eligibility.Healthcare Self Assessment service
Your own limited companyCompany accounts, Corporation Tax, director income and off-payroll status where relevant.Healthcare limited company accounts
PartnershipPractice accounts, allocated profit and each partner’s personal tax position.Healthcare partnership accounts

Sound familiar?

Problems we fix for salaried and resident doctors

  • "I think I'm paying too much tax because of a wrong tax code."
  • "I've never claimed my GMC, BMA or royal college fees."
  • "My extra shifts and bank work are taxed wrongly."
  • "I don't know whether I need to file a tax return."
  • "I've received a pension annual allowance letter."

What it's costing you

Leaving it unfixed is rarely free

Overpaid tax
Unclaimed expenses and wrong tax codes mean paying more than you owe, year after year.
HMRC penalties and interest
Late returns attract automatic penalties, plus interest on tax paid late.
Lost evenings
Hours spent on forms, invoices and spreadsheets after a long shift.

General examples — your position depends on your own figures.

How we solve it

What we actually do for you

Refund claims

We claim back overpaid tax for up to four previous years.

Tax code checks

We check every employment and fix wrong codes with HMRC.

Self Assessment

Filed for you when you need one, and explained when you don't.

Pension statement review

We explain your annual allowance position in plain English.

How we help

01

Accounts and tax returns

Year-end accounts and Self Assessment or company returns for the £100k tax trap for doctors, filed on time.

02

Fixed-fee advice through the year

Questions answered by your named accountant, without the clock running.

03

Making Tax Digital

Compatible software set up and quarterly updates filed where MTD applies.

04

NHS pension tax

Annual allowance and taper calculations, with Scheme Pays guidance where a charge arises.

What to know before you decide

Personal allowance withdrawal

This is one of the questions we work through with the £100k tax trap for doctors at the start of every engagement. We look at your real income, contracts and records, set out the options in plain English and confirm the work and fee in writing.

Tax Planning & Reviews for Doctors & Healthcare Professionals

Effective marginal rate

This is one of the questions we work through with the £100k tax trap for doctors at the start of every engagement. We look at your real income, contracts and records, set out the options in plain English and confirm the work and fee in writing.

Pension contributions and Gift Aid

For 2026/27 the standard annual allowance is £60,000. It tapers where threshold income exceeds £200,000 and adjusted income exceeds £260,000, by £1 for every £2, to a minimum of £10,000. NHS pension growth is measured as a defined benefit input, so a pay rise or promotion can trigger a charge without any extra contributions. We run the calculation before the year ends and explain Scheme Pays where a charge arises.

NHS Pension Tax & Annual Allowance for Doctors & Healthcare Professionals

Childcare impact

Care and staffing businesses depend on accurate payroll, minimum wage compliance including travel time, auto-enrolment and VAT exemption conditions that hinge on regulation. Monthly management accounts show occupancy, staff cost ratios and cash flow early enough to act.

Your questions answered

How should doctors structure private practice income?

Most private practices start as sole traders and incorporate once profits are well above personal spending needs. Groups of clinicians may use partnerships, LLPs or a shared company. The right structure depends on profit level, NHS pension membership, who owns equipment and premises, and how fees are billed. We set out the options in writing.

Check the official guidance · www.gov.uk

Help with this question: VAT Registration & Returns for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

Is a limited company worth it for private practice?

A limited company can suit the £100k tax trap for doctors with substantial private or outside-IR35 income that is not all needed to live on, because profit is taxed at corporation tax rates and can be paid out over time. It brings extra accounts, payroll and filing costs, and NHS employment income cannot move into it. We model sole trader against limited company on your real figures first.

Check the official guidance · www.gov.uk

Help with this question: VAT Registration & Returns for Doctors & Healthcare Professionals

Help with this question: Limited Company Accounts & Corporation Tax for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

What is the tapered annual allowance and how does it affect doctors?

The annual allowance is the amount of pension growth you can have each tax year before a tax charge, £60,000 for 2026/27. For high earners it tapers: if threshold income exceeds £200,000 and adjusted income exceeds £260,000, the allowance falls by £1 for every £2 above £260,000, down to £10,000. NHS pension growth is measured as a defined benefit input, not your contributions.

Check the official guidance · www.gov.uk

Help with this question: NHS Pension Tax & Annual Allowance for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

How does Scheme Pays work for an NHS Pension annual allowance charge?

The annual allowance is the amount of pension growth you can have each tax year before a tax charge, £60,000 for 2026/27. For high earners it tapers: if threshold income exceeds £200,000 and adjusted income exceeds £260,000, the allowance falls by £1 for every £2 above £260,000, down to £10,000. NHS pension growth is measured as a defined benefit input, not your contributions.

Check the official guidance · www.gov.uk

Help with this question: NHS Pension Tax & Annual Allowance for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

What is the £100k tax trap and how can doctors plan around it?

The tax trap occurs because the personal allowance of £12,570 is tapered away for income above £100,000. This results in a high effective tax rate on earnings in that specific band. Doctors can plan around this by making pension contributions or charitable donations to reduce their adjusted net income. Medical.Accountants provides bespoke advice to navigate these thresholds.

Check the official guidance · www.gov.uk

Help with this question: Tax Planning & Reviews for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

Do doctors need to charge VAT on private work or medicolegal reports?

Medical reports produced mainly for legal, insurance or employment purposes are generally standard-rated for VAT, unlike treatment aimed at protecting or restoring health. If your medicolegal fees exceed the VAT registration threshold you must register and charge VAT on them. HMRC Notice 701/57 sets out the rules.

Check the official guidance · www.gov.uk

Help with this question: VAT Registration & Returns for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

How are fees from private hospitals and insurers taxed?

Most health care by registered professionals is VAT exempt where the main purpose is protecting or restoring health, so many clinicians never register. VAT becomes relevant when you sell goods, provide cosmetic or medicolegal services, or exceed the registration threshold with taxable income. HMRC Notice 701/57 gives the official guidance.

Check the official guidance · www.gov.uk

Help with this question: VAT Registration & Returns for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

Can I claim medical indemnity and royal college fees?

You can claim tax relief on costs incurred wholly and exclusively for your work: HMRC-approved professional fees such as GMC, NMC, GDC or HCPC registration and approved royal college and union subscriptions, uniform laundering, and business mileage between workplaces. Ordinary commuting and most exam or training costs for new qualifications are not allowable. Employees can claim back up to four tax years.

Want us to check this for you? Get a free review →

What is the best way to extract profit from a medical company?

Profit extraction usually involves a combination of a tax-efficient salary and dividend payments. The dividend allowance is currently £500. Corporation tax at 19% applies to profits up to £50,000, while the 25% main rate applies above £250,000. The most efficient strategy depends on your total personal income and the company's profitability.

Check the official guidance · www.gov.ukWant us to check this for you? Get a free review →

Will my NHS Pension be subject to inheritance tax from April 2027?

Most NHS doctors and many healthcare staff are members of the NHS Pension Scheme. Contributions are deducted through payroll, and locum or private work can count only through the correct forms. High earners should check the annual allowance each year, as pension growth can trigger a tax charge.

Check the official guidance · www.gov.uk

Help with this question: NHS Pension Tax & Annual Allowance for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

What does a tax planning review include?

Our tax planning reviews involve a comprehensive analysis of your professional income, expenses, and available reliefs. We examine your current business structure and pension position. The review identifies opportunities to utilise allowances like the £500 dividend allowance or £10,500 employment allowance. All advice is tailored to the specific regulations governing UK healthcare professionals.

Help with this question: Tax Planning & Reviews for Doctors & Healthcare Professionals

Want us to check this for you? Get a free review →

How can I legally reduce my tax?

Tax liability can be reduced by ensuring all professional expenses are claimed and all statutory allowances are utilised. This includes the £12,570 personal allowance and various business reliefs. You may also consider the timing of equipment purchases or pension contributions. Medical.Accountants provides remote, UK-wide advice to help healthcare workers maintain tax efficiency.

Want us to check this for you? Get a free review →

When should I review my tax position?

You should review your tax position annually or whenever your clinical income significantly changes. Key triggers include becoming a partner, starting private work, or reaching the £50,000 MTD for Income Tax threshold in April 2026. Regular reviews ensure you meet the 31 January filing deadline. We provide ongoing support for doctors throughout their careers.

Want us to check this for you? Get a free review →

Quick quote

See what you could save — get a fixed fee in one working day

Three fields. No obligation. A specialist replies, not a sales team.

Packages for your working life

Accountancy packages for doctors

Self-employed income, a limited company, PAYE or a mixture: start with the support that matches how you actually work. We check your status and agree the scope and fee before starting.

Self-employed accountants for doctors packages

For genuine sole-trader income. We prepare your business accounts and Self Assessment, review allowable expenses and explain payments on account.

  • Sole-trader accounts and personal tax return
  • Allowable business expenses reviewed
  • Tax reserve and payment deadline guidance
  • MTD support scoped separately where required

Fixed fee quoted after a review

Discuss this package

Limited company accountants for doctors packages

For clinicians working through their own company. Choose Essential/Compliance, Core/Complete or Growth according to your accounts, bookkeeping and payroll needs.

  • Statutory accounts and Corporation Tax return
  • One director return for salary and dividends from the same company
  • Confirmation statement support; filing fee extra
  • Bookkeeping, VAT and payroll according to your chosen plan

Company packages from £45.83 + VAT / month

Compare company packages

Personal tax return packages for doctors

For employed clinicians, partners and people with mixed income who need a return. We check whether Self Assessment is required and reconcile the relevant income, expenses and pension tax information.

  • Self Assessment requirement checked
  • PAYE and other income reconciled
  • Eligible employment expenses reviewed
  • Pension tax work agreed separately where needed

Fixed fee quoted after a review

Discuss this package

Employment status is determined by the facts, not the package you choose. PAYE, umbrella and partnership arrangements may also apply. A limited company does not override IR35 or off-payroll rules, and not every employed clinician needs a tax return.

Overpaid tax?

Tax refund support for doctors

We review tax codes, eligible professional expenses and overpaid tax, then prepare a claim where you qualify. A refund is not guaranteed; HMRC decides the claim.

£249 + VAT

For refunds up to £5,000, our fee is £249 plus VAT. For refunds above £5,000, add 5% of only the amount above £5,000 to the £249 fee. VAT applies to the total professional fee.

Example: a £6,000 refund means £249 + £50 = £299 plus VAT.

Professional fee, excluding VAT

£249

Ask about a tax refund

This illustrates the fee only, not whether you qualify or how much HMRC will refund. We agree the claim scope and payment terms before work starts.

What's included

Limited company packages — compare what's included

Essential/Compliance

For locums, salaried GPs and dentists with a limited company

from £45.83 + VAT /month

  • FRS 105 or FRS 102 1A statutory accounts
  • Corporation tax return (CT600) and tax computation
  • Confirmation statement preparation and filing support
  • One director Self Assessment return
  • Deadline reminders ahead of every filing date

Core/Complete

For private practice, consultants and associate dentists

from £62.50 + VAT /month

  • Everything in Essential/Compliance
  • Monthly bookkeeping and bank reconciliation
  • Quarterly Making Tax Digital VAT returns
  • Director payroll with RTI filing and pension submissions
  • Quarterly review call on numbers and tax position

Growth

For clinics, dental practices and growing medical teams

from £75.00 + VAT /month

  • Everything in Core/Complete
  • Payroll for up to five employees

Prices exclude VAT. Making Tax Digital quarterly updates available as an add-on. Compare fees

Why clinicians trust us

Chartered accountants who know the NHS

  • ACCOTAX has served over 5,000 clients.
  • Regulated chartered accountants (ICAEW and ACCA).
  • Founded by Waqas Sagar ACA FCCA FMAAT, with 18+ years' experience.

Reviewed by Waqas Sagar ACA FCCA FMAAT

Chartered accountant and founder of ACCOTAX. Last reviewed October 2026.

Get my fixed-fee quote

How it works

  1. 01

    Free call

    A 15-minute chat about your income, structure and deadlines.

  2. 02

    Onboarding in 48 hours

    We set up your records, software and HMRC agent access.

  3. 03

    We handle the rest

    HMRC, NHS Pensions and every deadline, with reminders before each one.

Free resource

Get the doctor expenses checklist free

Tell us where to send it and we'll email it to you.

Your questions, answered

What is the £100k tax trap?
The tax trap occurs because the £12,570 personal allowance is tapered away once adjusted net income exceeds £100,000. For every £2 earned above this limit, £1 of the allowance is lost. This results in a high effective tax rate on income within this specific bracket. Careful planning is required for doctors moving into senior roles.
How can doctors reduce income below £100k?
It depends on your circumstances. Our team reviews your income, structure and records and confirms the right approach for the £100k tax trap for doctors in writing as part of your fixed-fee service.
How much does an accountant for doctors earning over £100,000 cost?
Our packages for the £100k tax trap for doctors start at £45.83 + VAT a month, with Core at £62.50 and Growth at £75 + VAT. The right package depends on your income sources, whether you trade through a company and any payroll, VAT or pension work. We confirm the exact fee in writing before any work begins, so there are no surprise invoices.
Do doctors earning over £100,000 need to comply with Making Tax Digital?
Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords whose qualifying income (gross self-employment plus property income) is over £50,000, falling to £30,000 from April 2027 and £20,000 from April 2028. PAYE salary does not count. The £100k tax trap for doctors trading through a limited company or a partnership are not brought in yet. We set up compatible software and file the quarterly updates for you.
How do I switch to Medical.Accountants?
Switching takes minutes on your side. You sign our engagement letter, we contact your previous accountant for professional clearance and records, and we take over HMRC and Companies House authorisations. You can switch mid-year; we pick up from the last filed return.

Speak to a specialist today

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Related healthcare expertise

NHS Pension Tax & Annual Allowance for Doctors & Healthcare ProfessionalsVAT Registration & Returns for Doctors & Healthcare ProfessionalsLimited Company Accounts & Corporation Tax for Doctors & Healthcare ProfessionalsAccountants for doctors and GPs in the UKLocum doctor accountants: tax, IR35 and NHS pensions
Accountants for healthcare professionalsHealthcare tax questions answered

General information for the 2026/27 tax year, prepared from the official guidance linked below. It is not personalised tax or regulated financial advice. Rules and circumstances can change; confirm your position before acting.

Official sources referred to on this page: NHSBSA annual allowance guidance; HMRC pension annual allowance and taper (GOV.UK); HMRC VAT Notice 701/57 (health professionals); GOV.UK inheritance tax on pensions (from April 2027).

Official guidance

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