Dr. Andy Egwim explains why NHS consultants stop taking extra shifts once they earn over £100,000. The UK's 60% tax trap erases your personal allowance by £1 for every £2 earned above that threshold, making additional work financially pointless. Pension contributions can shelter the income and restore tax efficiency.
A consultant told me recently that she stopped taking any extra work from the NHS, not because she was tired, but because every extra shift felt like she was working harder and harder for very little money and being punished with more and more taxes. So she had just read my book and realized why, and I'll tell you exactly why she had fallen into the 60% tax trap. I'm Dr. Andy Egwim, I'm the author of The Modern Wise Doctor, and over the last couple of years I've taught about 4,000 doctors tax efficient investing. I've been an investor myself for for more than 21 years. So what's the 60% tax trap? Basically, if your income, your adjusted net income, goes above £100K, for every £2 above that £100K, you lose £1 from your tax-free allowance. And then your effective tax rate between £100K and by the time it gets to £125K, you've lost your whole tax-free allowance, and then your effective tax rate is 60%. So this, how to avoid this one of it, is actually utilizing your pensions in a very careful way to invest. And that's part of what I'll be teaching in my workshop, in the Scrubs shop. If you want more details, just comment Scrubs and someone will send it to you.
