More than half a million UK taxpayers – nearly a quarter more than last year – are now paying 60% tax due to frozen thresholds, Accountancy Daily and The Times have reported.
Although the official top rate of tax is 5%, charged on earnings over £125,140, the ‘marginal’ tax rate (the rate paid on the extra you earn) works out at 60% for earnings between £100,000 and £125,000. This is due to the ‘tapering’ of the personal allowance (the first £12,570 of your annual income) once you breach £10,000.
Meanwhile in Scotland, the introduction of new tax bands last spring means that GPs earning over £75,000 will now face the ‘advanced’ tax band. Anyone earning more than £28,867 will see their tax bill go up for 2024-25.
As the mid-year payment deadline for self-employed taxpayers approaches, this year GPs may be looking ahead at their forecasted earnings to gauge how to budget for future payments on account.
While some GPs may worry about higher taxes, others may look to reduce payments on account if they experienced a drop in income in 2024. NASGP has previously reported on national concerns about the availability of work this year, and resulting pressures on sessional GPs’ income.
Dr Richard Fieldhouse, NASGP chair, said: “With so many GP locums having to face stiff competition for work, the fear of paying too much tax may seem a distant luxury. But it’s not unheard of for locums to take on too much work ‘just in case’, only to end up with a huge tax bill for all their hard work.
“And for those who haven’t managed to fill their calendar, then getting a reduction to payments on account would be a wise move.
“Either way, submitting your questions before our September webinar on tax should help make best use of the money you’ve earnt.”
NASGP’s September webinar with specialist medical accountant Tori Ferguson will cover all kinds of sessional GP questions about tax. Members can sign up to attend for free.