The 10 Financial Traps That Keep Doctors Stuck — Part 2

Hi,

When I got my first proper NHS payslip, I felt proud. Years of exams, night shifts, and stress had finally paid off.

But then I looked closer.

Nearly 40% of my salary was gone — tax, pension, NI, student loan. My “decent doctor’s salary” didn’t look so decent anymore.

At first, I didn’t question it. I just thought: “That’s life.”

Later, I realised I’d been missing out on refunds, allowances, and tax-free accounts that could have saved me thousands.

That’s when I learned about the third trap.

Two weeks ago, I promised I’d share Traps 3 and 4 together. But honestly, trying to squeeze them into one email (or trimming too much) would have lost the flavour. So here’s Trap 3 in full — and I’ll send you Trap 4 next week.

3️⃣ Trap Three: The Tax Trap — Where Did My Paycheck Go?

Here’s the reality for doctors in the UK:

That’s up to 40% gone before you even see it.

And it gets worse:

• Many doctors miss out on tax deductions they’re entitled to.

• Few take advantage of tax-free accounts.

• Some are even placed on the wrong tax code, costing thousands over time.

🚪 The Escape Route

1. Maximise tax-free accounts

• Stocks & Shares ISA → Invest up to £20,000 a year tax-free. That means no capital gains or dividend tax eating into your returns. Even £100/month adds up over time.

• Lifetime ISA (LISA) → If you’re under 40, you can put in £4,000 a year and the government tops it up with 25%. That’s an easy £1,000 bonus every year for your first home or retirement.

• NHS Pension → This is one of the best deals going. For every £1 you put in, your employer contributes about 20p. Over a lifetime, that’s a huge benefit. Unless you’ve had proper advice, don’t opt out.

💡 I max out my LISA almost every year because I’d rather my money grow tax-free than hand more to HMRC.

2. Claim work-related expenses
Most doctors don’t know they can claim tax relief on their professional costs. But HMRC lets you deduct things like:

• GMC annual fee (~£420 → worth up to £168 back)

• BMA membership (~£400 → worth up to £160 back)

• Indemnity insurance (~£200–£500 → £40–£200 back)

• Royal College membership (~£300–£600 → £60–£240 back)

• Exams (MRCP/MRCS etc: £600–£1,000 → £120–£400 back)

• Textbooks, equipment, and even mileage between hospitals

💡 For my first five years, I didn’t even know this was possible. Once I submitted claims, I got a refund and my tax code was adjusted — saving me even more every year.

3. Use allowances & salary sacrifice

• Salary Sacrifice → Put more into your NHS Pension or Cycle-to-Work scheme and reduce taxable income.

• Marriage Allowance → If one partner earns under £12,570, they can transfer some of their allowance to the other (worth up to £252/year).

• Side Hustle Allowance → Your first £1,000 of extra income (tutoring, private work, blogging, etc.) is tax-free.

✅ Final Thought: The 15-Minute Rule

Spend an hour once a year to:
✔ Check your tax code
✔ Claim expenses
✔ Review allowances

I saved thousands this way — money I now invest instead of handing to HMRC.

Next week: Trap Four — Lifestyle Inflation (aka why so many doctors look rich but stay broke).