How can doctors make the most of tax allowances at the end of the financial year?

While it can seem a daunting task, successfully managing and making the most of your tax allowances can potentially save you thousands of pounds each year. The trouble is, most people get confused about the different rules in place.

Here are some of the quickest and easiest methods of making the most of your allowances before the tax year ends on 5 April.

1) Use your full ISA allowance

Whether you’re saving on a regular basis, or just have a lump sum you want to put away, ISAs are a tax efficient way of saving and investing. However, our research shows that more than half of doctors* put money in an ISA for long term savings.

You can put up to £15,240 into your ISA this year tax free, so it makes sense to move any savings you have into one before 5 April. This ISA allowance resets for the new financial year, and also rises to £20,000 for 2017/18.

While ISAs offer tax-free savings, certain current accounts have competitive interest rates so it’s important to make sure that your savings are working effectively and you’re getting the best rate. It’s also important to remember that interest on savings stored in a current account is taxed if it’s above your personal savings allowance, so it’s vital to factor that in when calculating the interest you’re getting.

2) Use your full pension annual allowance

For those in the higher tax band with an income of more than £43,000, increasing your pension contributions could significantly reduce the rate of tax you pay.

All UK taxpayers normally have an annual allowance of £40,000 for pension contributions. That means you can contribute up to this amount into your pension without being faced with a hefty tax charge.

But our research found that, on average, doctors put around £1,000* into a pension every month, the equivalent of around £12,000 a year, leaving nearly £28,000 of non-taxable pension contribution that could be used.

By moving any income that would be taxable at the higher rate into your pension funds, it’s possible to save a substantial amount of income tax. As with any form of savings or investments, it’s generally a good idea to save in as much as you can for future security.

Remember too that for those who haven’t contributed this full allowance over the past three years, it’s still possible to make the most of your unused allowance and top up your pension pot. You’re allowed to carry forward any unused allowance from the past three years, so long as the total contributions you make in the tax year is not more than your total annual earned income.

This means doctors, based on our research, could potentially contribute more than £75,000 tax free into their pension funds this April, provided they have sufficient income.

3) Plan ahead

While inheritance tax may be a distant thought, making clever decisions can safeguard the finances of family members and save them thousands of pounds in inheritance tax.

Generally, anyone with an estate worth less than £325,000 won’t face inheritance tax. But for high earners with estates worth more than this, the value of your estate once the business is sold could land you with a hefty inheritance tax bill.

But there are ways this can be reduced.

For those who regularly put money aside for family members, making “gifts” can be a sensible way of saving on a future inheritance tax bill.

Everyone can make a gift to reduce the value of their estate. The current gift allowance per annum is £3,000, known as an annual exemption. It’s also possible to carry over leftover allowance from the previous year to a maximum of £6,000.

4) Get financial advice

To make the most of your tax allowances speak to a financial adviser with expertise of the medical profession who can make sure that your money is working for you and that you’re making the most of your tax allowances.

The above information does not constitute financial advice. Wesleyan provides specialist financial advice to doctors, lawyers, teachers, and dentists. For more information about planning your finances go to

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