Year-End Tax Planning for Healthcare Professionals

As we approach 5 April 2026, now is the ideal time to review your finances and ensure you are making the most of the tax reliefs, allowances, and planning opportunities available. Early action can help reduce tax liabilities, avoid unexpected bills, and keep your financial affairs running smoothly. 

1. Review Your Income Earlyand Plan Your Cashflow

Income levels can vary from year to year and can be more complex if you have multiple sources of income (e.g., employment, self-employment, and property rental income). Estimating your income now helps to identify whether you will be subject to any income tax band changes and possible impacts on balancing payments / repayments and payments on account.  

If your income is lower than in 2024/25, payments on account may be reduced; if it is higher, a balance may be due in January 2027, which could also affect payments on account for 2026/27 due in January 2027 and July 2027. Where you expect your circumstances to change, it is important to speak to your accountant. They can prepare tax estimates where needed, helping you to understand the impact of any changes before the tax year ends. These forecasts give you a clear picture of what your upcoming tax bill is likely to be, helping you avoid surprises and ensuring you have set aside the right amount well in advance. 

2. Understand Your NHS Pension Position

If the value of your NHS pension pot grows by more than your annual allowance (the standard allowance is £60,000 for 2025/26), you may face tax charges. The allowance may be lower if your taxable income exceeds £200,000 and you are subject to tapering, in which case this can be reduced to £10,000. 

Unused allowances from the previous three years can be carried forward, so you may be able to offset this against current year growth, which can reduce or cover an annual allowance tax charge. 

If you expect an annual allowance charge, you may be able to use Scheme Pays so the pension scheme pays the tax, but remember that this will ultimately impact your final pension pot, so you should seek financial advice. 

Annual allowance statements often arrive late, and you should submit them to your accountant as soon as you receive them. 

3. Use YourDividend Allowance 

For those receiving dividends through a Limited Company, the first £500 remains tax-free. If your company has distributable reserves, review whether you should declare dividends before the tax year-end. If your main income is from your own company, review the split of salary and dividends to keep your tax position efficient. 

From April 2026, the rates of tax on dividend income increase for basic-rate taxpayers from 8.75% to 10.75%, and from 33.75% to 35.75% for higher-rate taxpayers; the rate of 39.35% remains for additional-rate taxpayers. Given these confirmed increases, you should consider whether you would benefit from taking more dividends within the 2025/26 tax year.  

4. Make Use of Tax-Efficient Allowances 

Take advantage of all the available allowances: 

• ISA allowance £20,000 – this is a simple way to accumulate tax-free savings, any interest received is not subject to income tax and does not form part of your savings allowance 

• Savings allowance – basic rate taxpayers can receive interest of £1,000 tax-free, this is £500 for higher rate taxpayers 

• Capital gains tax – everyone has an annual exemption of £3,000 to offset against any capital gains made in the year. This allowance cannot be carried forward so if you have multiple gains, it may be worth thinking about the spread across tax years. 

5. Inheritance Tax

• Annual gift exemption – You can give up to £3,000 each year (or £6,000 if last year’s allowance is unused).  

• Small gifts – You can give up to £250 per person, to any number of people, if they do not also receive part of your £3,000 allowance. 

• Wedding gifts – £5,000 for a child, £2,500 for a grandchild, or £1,000 for anyone else- are tax-free. 

• Regular gifts from surplus income –  These are fully exempt if they come from your excess income and do not reduce your standard of living.  

6. Claim All Allowable Expenses

Make sure that you are claiming for relevant expenditure incurred against your self-employment or employment income. Common items include: 

• Subscriptions (not reimbursed by your employer) 

• CPD and training 

• Business mileage (meetings, courses, patient visits) 

• Clinical apps and software 

7. Plan Capital Expenditure

Currently, you can claim tax relief on many equipment purchases using the Annual Investment Allowance (AIA). This allows you to obtain tax relief by deducting the full cost of qualifying items—up to £1 million – from your profits in the year you buy them. 

The AIA will continue, but from 6 April 2026 (1 April 2026 for companies) the tax relief available on assets that do not qualify for AIA will reduce. The main “writingdown allowance”- the slower form of tax relief for these items – will fall from 18% to 14%. This means tax relief on those purchases will be spread over a longer period in future. 

If significant capital spend is envisaged, for example, if you are undertaking a building project, it may be beneficial to advance expenditure where possible. 

8. Spousal Planning Opportunities

Where one spouse has unused allowances or falls into a lower tax band, opportunities may exist for: 

• Marriage allowance transfers (subject to eligibility) 

• Transferring savings or investments 

• Reviewing ownership of rental properties and any other income-yielding assets 

Year-end planning is a valuable opportunity to reduce tax exposure, increase savings efficiency, and ensure you are fully using the allowances available. If you require any further information, please get in touch with your usual BHP contact 

Summary Table – Year-End Tax Planning for Healthcare Professionals