Ndubuisi 'Andy' EgwimMoney Coach for Medics|Ex-NHS GP|21+ Yrs Investor| Founder, MoneyWiseDoctor.com|Helping Medics Avoid Big Money Mistakes

The Hidden 60% Tax Trap (And How Doctors Escape It)

21 Dec 2025 · 1 min

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Andy Egwim (Ndubuisi 'Andy' Egwim) explains the UK "60% tax trap" affecting higher-rate earners—notably medics and doctors—and practical ways to reduce tax by using a company to split income. He states the trap applies when taxable income lies between £100,000 and £125,140 because for every £2 earned over £100,000 a taxpayer loses £1 of personal allowance, which can raise the effective marginal tax rate to about 60%. He contrasts sole-trader exposure to 40%+ rates with the greater control offered by operating through a company (referred to in the clip as "midtech companies") to manage salary vs dividend extraction.

Questions this video answers

£100,000 to £125,140.

For every £2 earned above £100,000 you lose £1 of your personal tax allowance, effectively raising the marginal tax rate toward 60%.

Chapters

In my experience, it's mainly about tax efficiency, especially for medics, doctors and healthcare professionals worried about getting caught in the 60% tax trap. For many, it's about keeping more of what they earn while optimizing their finances. Now, for example, if you're a sole trader and you're in and above a certain amount, a significant chunk of your income is taxed at 40% or more. That's a higher tax rate payer. Now, if your income falls between 100,000 and 125,140, you fall into the 60% tax trap. This happens because £2 and every £2 you earn above 100,000 means that you lose £1 of your personal tax allowance, effectively raising your tax rate to 60%. I mean, we have a blog on this that is quite detailed and is ranking number one on Google. You can check it out with the links in the description and have read about it. But now back to the midtech companies. Setting one up gives you more control over how and when you pay yourself. You can strategically split your income between your salary and your dividend, reducing your overall tax liability.