The ABCDE Tax X-Ray — The System Every UK Doctor Needs to Stop Leaking Tax

Working harder without being tax efficient can feel like pouring water into a bucket with holes in it. More income goes in, but somehow far less than what you expected seems to stay in. It never gets full. The bucket never gets full. Now I've heard doctors describe this in almost exactly the same words. Feels like I'm running on the same spot, not making any progress. I'm working more, but not seeming to get ahead despite working harder. I'm at the top of my career as an NHS consultant and earning more than I ever have. So why doesn't Look, for some doctors, that eventually leads to a very understandable question. Should I cut down on my work and just go part-time? Should I just stop working extra shifts and any locums or any consultancies or anything like that? Should I stop trying to earn more? Because what's the point if HMRC is just simply going to take more of it? Look, if you already plan to cut down on work to have more time to spend with yourself, your pursuits, And your family, that's totally fine. But it should be an intentional move. You should not be forced into it due to tax inefficiency. I don't think the choice has to be binary: one, work less and earn less, or simply accept whatever tax happens to come out of it. I think there's a third option. I know there's a third option: understand the system and use it efficiently. That's number three option. Because earning more and keeping more of what you earn are two different skills. And after teaching thousands of doctors, I've become convinced of something: you do not need to memorize the entire. UK tax code. Nobody needs to do that, but you definitely need a system that tells you what to check and a way, routine, to have it checked, probably annually. Today I'm going to give you mine. It's called the ABCDE tax x-ray. ABCDE, 5 areas I think every doctor should periodically review. I wrote about it in chapter 5 of my book: allowances, business structure, clawbacks, deductions, estate and exit planning. And if you stay with me to the end, I'll also tell you how you can join me for the Doctor's Tax X-ray workshop where We'll walk through this much more practically, ABCDE, through all of it. But first, let me show you why having a system really matters. Practical example. A while ago, an NHS consultant in our Moneywise Doctor community contacted me after watching one of my videos on our YouTube channel. She had initially received a letter from HMRC, one of these lovely brown letters, saying she owed several thousands of pounds in taxes. She was understandably distressed. So went through her tax position systematically, supported by the experts that work with us. By legitimately adjusting several parts of her tax planning, she calculated that she had reduced her tax bill by around £8,000. So basically, she went from owing HMRC several thousands of pounds to getting £8,000 in tax rebate. I've received similar messages from doctors who discovered thousands of pounds of professional expenses they had never previously claimed. A few of them have sent me messages. A handful received tax relief over £9,000. Some recovered hundreds, some recovered thousands. But there's another side to these stories. Let's cut it honestly. There are also several doctors who have reached out to me a bit late and discovered opportunities too late or lost out several thousands of pounds, and in some cases, tens of thousands, just due to some costly mistakes that they weren't aware then, as at the time they made the mistakes. A number of them have shared how they made investment decisions without considering tax wrappers. In a handful of cases, I know this has resulted in additional tax bills, sometimes above £20,000. There are also other doctors whose income quietly crossed important tax thresholds and they sank into tax traps that they were not even aware of before then. And the most painful one I remember was a senior GP, lovely guy, who lost over £100,000 in an investment, but never registered the loss until it was too late. He had no idea that capital loss claim was a thing. So he really had legitimate capital losses, but didn't notify HMRC within the required time. These are different doctors, different mistakes, but same underlying problem. Nobody had given them a systematic way to check their tax leakages. And that's the difficult part. You don't know what you don't know. If you don't know what you don't know, you don't even know what questions to ask to avoid making these costly mistakes. Let me give you another example. NHS doctor, she had built a 6-figure investment portfolio. She had done the hard bit. She had done the hard work, saved a lot of money, invested for decades, and she was thinking long term. But much of that money had been invested outside tax-protected accounts. She was using a general investment account, that's GIA, or dealing account or trading account. So when gains eventually became taxable, she faced a significant capital gains tax in tens of thousands. Now, that doesn't mean every penny could automatically have gone into an ISA or pension. That's not what I'm saying. But as you would have learned from my previous videos, there are annual limits to all those things. But had available ISA and pension allowances been considered systematically over the years, including hers and her family's, part of that huge tax exposure may have been avoided. There are countless examples. Feel free to share yours in the comments section as well if you've made a tax mistake. But I'll give you one more. A portfolio GP had additional professional income on top of their NHS salary, expert witness work, locum shifts, rental property, and was also an advisor to a health tech company. So this pushed him into 60% tax trap, meaning that his additional income was effectively taxed at the marginal rate of 60%. That means for every extra £100 he earned, he only took home £40 and £60 went to HMRC. Now the question It's not simply, should this have gone through a limited company? Should he have put it in pensions and all that? That's too simplistic. The first question was, what was the best tax structure for him? Did he review his tax from a systematic way? And if a company was appropriate, he could look at corporation tax. How much profit can he extract? And what are the wider tax consequences? Because structure matters, but structure only helps if it fits the actual work. Then there are professional expenses. In chapter 5 of my book, I share the story of Dr. Sarah, an NHS doctor who had paid professional expenses for 15 good years without claiming any available tax relief. She didn't even know about it. By the time she discovered it, she had already lost 10 years. She could only claim the current year and 4 years back. That amounted in thousands of pounds that she lost. In fact, tens of thousands. It's £2,500 is the maximum per year. She could still claim the most recent years, but she had to give up those 10 years. They were The earlier ones were gone and they were gone for good. Look, for her, like I was saying to her, it's better late than never. She could have gone her whole career without ever finding out if we didn't talk. So half bread, or in this case, one-third bread, is better than none, right? But it would be much better to know earlier and get the full loaf of bread that she was entitled to. And here's another one. If you dispose of investments at a loss, reporting an allowable capital gains tax loss can allow that loss to be used against future gains. Indefinitely. Well, HMRC generally gives you 4 tax years from the end of the relevant tax year to notify an unreported loss. Once properly claimed, unused losses can be carried forward indefinitely. But if you miss the window to establish the loss as reported, you lose a valuable tax asset. You can't use it again. That's why I don't think that tax efficiency should be something you think about just once a year in January. It needs a system. It needs an approach. Is that important? Well, hello. If we've never met before, I'm Dr. Andy Egwim. I'm a former salaried NHS GP. I've been an investor for more than 20 years. I'm the founder of moneywise doctor.com. Tax-efficient investing helped me leave my salaried job 4 years ago after achieving financial freedom. I'm the author of The Moneywise Doctor, which was a bestseller on Amazon for personal finance and retirement planning. True Moneywise Doctor has helped more than 4,400 doctors better understand tax efficiency, sensible investing, retirement and pension strategies, and overall financial well-being. Every week, over 10,000 doctors receive my weekly email financial education newsletter, and I've sent one for the past 180 weeks. So I know a little bit about tax efficiency for doctors, but one quick disclaimer, I'm not your accountant, solicitor, tax advisor or financial advisor. This is general financial education. Tax rules change, your circumstances matter, so seek personalized financial advice where needed. Now, let's jump into the tax x-ray, starting from A. A is for allowances. So the first question is, are you actually using the allowances available to you? This sounds very basic, but basic things are often where the money gets left behind. Allowances— ISA allowance, If you're investing outside an ISA while leaving ISA capacity unused, ask yourself why. Do you like paying more tax? There may be a good reason, but it should be a conscious decision. The same applies to pensions. There's an annual pension allowance for this current tax year, it's £60,000, but your real allowance is not always the headline figure you see online. For instance, if you're in a workplace pension like the NHS pension, you have to look at the growth in your defined benefit pension. So your pension growth, it uses part of your annual allowance. If you're a high earner, Tapering may also apply. So don't simply hear £60,000 pension allowance and assume I can put £60,000 into my SIC, except you're like me, you're self-employed. So you need to check. There's also your personal allowance, personal savings allowance, dividend allowance, capital gains tax allowance, and sometimes marriage allowance. But not every allowance applies to every doctor. That's the point. The question is not do these allowances exist. The question is which of them apply to me and am I actually using them properly? That's the million-dollar question or million-pound question. So that's A. So A is for allowances, not for Apple. B, business structure. How is your income structured? This becomes important once you're a doctor that starts earning outside your NHS employment. Locum work, private practice, expert witness work, teaching, consultancy, property, health tech advisor. The mistake is assuming that one structure is always the best. Just open a limited company. No. Always be a sole trader. No. Just use PAYE? Not necessarily. It depends on what the work actually is, whether it's genuinely self-employed, IRA 35 unemployment status, your total income, whether profits need to be extracted now or later, and long-term tax consequences. You have to consider it holistically. Business structure is not a tax trick or tax loophole. It's an operating decision. And that's B. So we are down to B. The next is C. C is for clawbacks. As income rises, the tax system does not move smoothly. There are thresholds. There are tax traps. The first is the high-income child benefit charge. Then at ₦100K, there's the ₦100K tax trap where your personal allowance is withdrawn, creating an effective 60% marginal tax rate at ₦125,140. Then pension taper is there as well. The key issue is not just your salary, it's your adjusted net income. Because that's what drives these rules around clawbacks. So that's C. And D is deductions and reliefs, tax reliefs. This is an area where many doctors leave money behind. Okay. GMC fees, Royal College subscriptions, medical defense fees, professional expenses. HMRC generally allows claims for the current tax year and 4 previous tax years, even mileage. Some reliefs also affect adjusted net income, including pension contributions and gift This can influence thresholds like the ₦60k and ₦100k tax threshold. That's D. Now E is for Estate and Exit Planning. What happens to everything you've worked so hard to build? I mean, if your family is going to end up paying 40% inheritance tax on almost everything, does that even make sense? Just because you didn't plan for it? Do you have a will in place? Then what are your plans to mitigate the impact of inheritance tax? Okay, ₦325,000 is the threshold, also known as the new rate band. And if you are passing on your residence, then the residential new rate band, it goes up to £500K where applicable. Above that, it's 40% inheritance tax may apply. And this could even affect things like your life insurance policy and even your pension, especially above 75. So in some cases, trusts can help, but it must be structured correctly. And from 6th April 2027, most unused pension funds will be included in estates for inheritance tax purposes. So this is another reason to not leave your tax efficiency to chance. You need a system in place. Finally, if you're planning to leave the UK for another country like Canada, Australia, New Zealand, or wherever, exit planning matters to you because leaving the UK changes your tax position significantly, and this can affect your ISA, your pension, and a few other areas as well. So it pays you to plan this intentionally and not discover that you have made an expensive mistake many years down the line. When it's too late. So that's E in a nutshell. There you have it, the ABCDE tax x-ray system. A, allowances. B, business structure. C, clawbacks. D, deductions. E, estate and exit planning. One system, 5 areas. And notice what I've not done in this video. I've not told you to open a limited company. I've not told you to put $60K into your pension. I've not told you to stop working at £100,000 or £60,000 for those who don't want to lose child benefits, because that's not tax efficiency system. Tax efficiency starts with checking. You need to check to get your own system, understanding, diagnosing, then deciding on structuring something that works for you in your situation. That's why I call it a tax X-ray. You don't order a tax X-ray because you already knew the answer. If you knew the answer, why bother? You order it because you want to see what you might be missing and to confirm what you are already thinking about. So that's what the tax x-ray is for. Now, if you're thinking this feels like a lot of work, or I need help applying it to my own situation, I need support, I want to watch alongside, um, other doctors to have this done, I have good news for you. If you want to go through the full ABCDE tax x-ray with me and a handful of doctors and to actually walk through what you might be missing, I'm running the Doctors Tax X-Ray Workshop this weekend. The link is in the description and pinned comments. Now, this is a structured workshop session, not a free webinar. We'll go through the ABCDE Tax X-Ray Framework step by step, and you'll understand how to apply it to your own situation. You'll leave with clarity on what you need to do immediately to plug any tax leaks. Look, There are just 30 places because we want to keep it very effective as usual, and it is just for doctors. Look, if you want to join, check the link in the description and pinned comment, or just comment X-ray and my team will send you the details. As usual, once we hit 30, we'll stop accepting any new registrations. And look, not everyone is going to get in, so if you don't manage to get a spot for this one or you're not ready for the workshop yet, I've also created free ABCDE Tax X-ray scorecard that you can take totally for free. It takes 3 to 5 minutes and helps you identify which areas of your tax planning may deserve a closer look. Maybe one area where you're leaking. I'll put that below as well. And of course, if this helps you at all, share it with one doctor, at least one doctor who feels like they're working harder but not getting ahead because they're leaking taxes. Because sometimes the biggest financial breakthrough is not anymore, it's Stopping the leak. I'm Dr. Andy Egwim from moneywise doctor dot com. Thank you for watching. I'll see you at the workshop or in the next video.