Ndubuisi Egwim explains why UK doctors earning £100,000 to £125,140 face a 60% tax trap. Rather than leaving the NHS pension, he recommends keeping it while adding a SIPP to use your full £60,000 annual allowance and control your investments.
For doctors caught in the infamous 60% tax trap between £100k and £125,140 in adjusted net income, your pension is a powerful tax-efficient tool. I do not personally think most doctors should leave the NHS pension in favor of using only a SIPP or a SSAS or even whatever pension, private pension you use. So for example, you may stay inside the NHS pension but also contribute to a SIPP strategically, particularly if you're approaching the 60% tax trap and you're about to lose your tax-free allowance. So if you want more control over that, how that pension is invested, you could use a SIP to use up your annual pension allowance of about £60,000 now for this current tax year. So for many smart doctors, the NHS is not the NHS pension versus SIP, it's understanding how they complement each other. Now, understanding how to use those is much better than opting out of the NHS pension.
