Andy breaks down when a SIPP makes sense for doctors: high earners over £100k facing the 60% tax trap, locums with limited companies, those without workplace pensions, and NHS staff with unused annual allowance. The current annual allowance is £60k, and exceeding it triggers HMRC penalties. For most doctors, the best move is combining NHS pension with a SIPP, not choosing one.
This is where TikTok, social media, often gets people into trouble because someone hears tax relief, pension contributions, extra £12,000, 60% tax trap, and suddenly decide, oh, I'm going to rush off and go on a platform and open one. It might be, it might not, it depends on your situation. A SIP is simply a tool, and like every other tool, whether it helps depends on the job you're trying to accomplish. So let's look at it. Who might a SIP actually help? Who might it suit? One, a high earner, especially if your adjusted net income is over £100K and you're being pulled into the 60% tax trap, that's a way to come out. For some doctors, pension contributions can be one of the most powerful tax planning tools available. That's exactly why this lovely GP, her situation caught my attention. However, you must check that you still have unused annual allowance so that you don't exceed the annual allowance and incur a penalty from our friends at HMRC. Two, if you're a locum doctor or private doctor working through a limited company, particularly if you don't have access to NHS pension, a SEAT might be great. If you're operating through a limited company, employer Making pension contributions into a SIP can sometimes be very tax efficient because the company may be able to make pension contributions as a business expense, but this is subject to rules and circumstances. 3. Doctors not in the NHS pension scheme. So if you don't have access to NHS pension or workplace pension, a SIP may be one way to build a retirement saving with tax relief, especially if your workplace pension is not that fantastic. 4. Doctors already in the NHS pension who have unused annual allowance and want to build additional retirement assets outside the NHS pension scheme. Because despite what many people think, NHS pension versus SIP is often the wrong way to look at it. For many doctors, the answer is NHS pension plus SIP, as long as you have headroom in terms of your unused annual allowance. It's currently £60,000 for this tax year.
