Most doctors, not only FY1s, don’t understand how their pay is calculated. The concern is that this means they could be overtaxed, underpaid or not claim back tax on things like GMC fees.

If you're not going to read the whole thing (because let's face it, you're a busy first year doctor!) check out the last two paragraphs: "how to quickly spot an incorrect tax code" and "how to claim tax relief" - because that's what's likely to benefit you the most.

Basics
  • You are paid once a month, and for most trusts payday is the last Thursday of the month
  • Your gross earnings are your basic pay plus extras: banding (old contract) or allowances/premia (new contract)
  • Deductions including tax, national insurance, pensions and student loan are calculated by the payroll team and are automatically deducted from your gross earnings. These deductions are then sent to the UK treasury on your behalf. This is called PAYE (pay as you earn) 
  • Your trust may also deduct other fees such as mess fees and parking permit
  • Gross pay – deductions = net pay. This is the amount that you receive directly into your nominated bank account
  • You should get a pay advice slip each month detailing the calculation made, your tax code and cumulative amounts paid/deductions received in the tax year to date. Save these slips for future reference
  • At the end of the tax year (runs April-April), you will get a form known as a P60, this will show your total earnings and deductions over the year

How is pay calculated?

This depends on whether you are in England, Scotland, Wales or Northern Ireland. The exact amounts are subject to review each year by the DDRB, so use the following as a guide but look up the latest figures on NHS Employers Pay Circulars (e.g. August 2019).

Your basic pay as an FY1
  • In England: Nodal point 1 £27,146/year
  • In Scotland: minimum £24,382
  • In Wales: minimum £23,553
  • In Northern Ireland: minimum £22,862
Basic salary is the minimum pay & usually accounts for 40 hours per week. Further boosts are added for on calls and other things but how this is calculated is dependant on whether you follow the new or old contract. In England the new contract introduced in 2016 is being used (which has been updated in late 2019). In Scotland the old 2002 contract is in use. For FY2, there is a different higher basic salary. 

New Contract (2016): Allowances & Premia
The basic pay for FY1s works out at £15.89 (pre-tax) per hour with 37% increase during unsociable hours of £21.86. It is explained by the BMA here with an example payslip below. 

You're also paid extra percentage of your basic salary for the amount of weekends you work. For 1 in 2 to 4 weekends that is 7.5% and for 1 in 8 that is 3%. The exact amounts for the range of weekends can be seen in the pay circular above. Pay for LTFT trainees is explained on the BMA site



Old Contract (2002): Banding 
For those on the old contract, banding increases your salary if you're working more than 40 hours depending on how many antisocial hours you do. Clasically FY1s are on 1a or 1b banding leading to 50% or 40% increase on the basic salary. This is because bands 2 & 3 are for those working >48 hours which isn't permitted under the European Working Time Directive. 

If you are working more than this or you're not meeting the rest requirements, a review can be requested where you monitor the hours you work which may lead to a rota being re-banded and your pay being increased. 

Banding, hours monitoring & LTFT pay is explained here.

Deductions

As typically you start in August which is four months into the April-April financial year, at the start you have less deductions. Therefore be careful to plan your expenses based on your first pay.  

Student Loans
If you took a student loan, you begin repayment the April after you graduate. However a previous loan for a previous degree may mean you start paying back immediately. The amount depends on whether you have a Plan 1 or Plan 2 loan. Most graduates now are on a Plan 2 but you can find out which plan you are on here & how much you'll pay if you had a previous loan or a Plan 1 loan.
  • Your student loan will continue to gain interest. For a Plan 2 loan that is set at 6.3% (reviewed annually) and will continue as you repay depending on how much you earn
  • For Plan 2, you start repaying 9% on earnings above £2143 per month (gross pay) e.g. if you earn £2500 that's £32.13 per month [(2500-2143)*0.09)]
Pension Contributions
You can read about what it is & how much you pay here & here. Classically you pay 7.1% of your basic pay & your employer also makes a contribution on your behalf. You also pay pension on any regular bonuses such as London Weighting. For LTFT trainees it'll be lower depending on how much you earn. Those with a very heavy on call rota may reach 9.3% (which is classically the amount you pay in FY2). 

Income Tax & National Insurance
The amount of tax you pay is dependant on your tax code. To understand exactly what all the variations mean, check out this

In the UK, a certain portion of your income is not taxed. Currently this is £12,500 but is reviewed annually. For certain people this amount is different
  • If you are claiming tax relief on professional subscriptions (e.g. GMC, BMA, Defence Fees)
  • If you're married you can donate/receive 10% of your spouse's personal allowance
  • If you have 2 jobs this is shared between them
  • If you earn more than £100,000 then this might decrease
  • If you have untaxed income, company benefits such as accommodation
To work out your personal allowance, multiple your tax code by 10. E.g. 1250L = £12,500. However for example, it might be 1255L if you claim back tax on the £50 GMC fees. 

Currently in England, Wales & Northen Ireland you pay 20% on anything you earn from £12,500 to £50,000. In Scotland, you pay very slightly different rates. 

The easiest way to estimate the amount you'll pay is using the calculator provided by HMRC. This also includes National Insurance which entitles you to state benefits & the state pension (see the amount you pay here). 

Almost all FY1s do not need to send a self-assessment as classically they only have one job and source of income. Even if you do have more than one source of income, it may be easier to get these factored in to your personal allowance. Once you are registered as doing self-assessment, every year HMRC will expect one (if it continues to apply) or you will be fined. You can find out more about self-assessment and who must complete a form here here

How to quickly spot an incorrect tax code
Usually your tax code should end in L (but check out "tax code" above for other situations). If HMRC has insufficient data on how much to tax you, they may issue you an emergency tax code e.g. X, W1, M1. These aren't meant to be permanent tax codes as they don't adjust depending on how much tax you've paid. Another situation is a BR tax code, where they are assuming you have another job (occasionally occurs if you pick up a bank or locum shift). 

Usually this means you're overpaying and you can phone HMRC (0300 200 3300) to explain your situation and they'll send your updated tax code to you & your employer. 

How to claim tax relief
You can claim back tax relief on some things which are required for your job such as GMC, MDU/MPS, BMA. If the total was £200 and you were paying 20% tax, then you would get £40 back if you claim tax relief. 

The easiest way is to claim online using this form. Register an account by providing your details, fill in what you're claiming & the amounts they cost and you'll receive an updated tax code. It takes about 15-20 minutes the first time but then a few minutes each year after that. 

By Dr Emma King SHO