Self-employed Dentists, be aware of the hidden 62% marginal tax rate that could affect your income.
As your income tax allowance gets withdrawn, you may experience a steep 60% (61% in Scotland) marginal tax rate.
This means that for every additional pound you earn beyond the £100,000 threshold up to £125,140, you will effectively pay 60% in taxes and 2% in national insurance if you are self-employed.
This high-income tax rate can significantly impact your earnings, so it’s crucial to understand how it works and plan accordingly.
If you expect your income to be within the 60% rate, you should consider talking to a financial adviser about making a pension contribution before the end of the tax year on the 5th of April, 2024, which could save you up to 40% income tax.
