Payslips & Income Tax

Each month, your pay and any deductions will be summarised to you in the form of a payslip. You should check your payslip every month to ensure you’re not being overtaxed or underpaid. Pay extra attention when you’re switching rotations or doing locum shifts as this is when issues commonly arise.

This & other essential employment topics are covered in our video series. Please leave a comment below if you have any questions and if you need support, you can join the BMA.

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Spotting an incorrect tax code

This is the most common issue junior doctors face. Usually, your tax code should end in L (but check out “tax code” below 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. HMRC has a user-friendly online platform for registering and looking at what information it has on you. You will need your National Insurance Number to register and you can look back at the last few years of how you have been taxed. You can also phone HMRC (0300 200 3300) to explain your situation and they’ll send your updated tax code to you & your employer, however, online is much quicker.

You can use this account to also claim tax back on your GMC fees, BMA membership fees, exam fees and indemnity. More information and how to claim are outlined here.

The basics

  • NHS staff are usually paid once a month, for most trusts payday is the last Thursday of the month
  • You will be provided with a payslip that allows you to review all the money you earn & tax you pay. Most trusts prefer to go paperless, so your payslip is likely to be accessible each month via ESR. Save a copy to your personal folder in case you need to prove your earnings in the future.
  • At the end of the tax year (April to April), you are given a summary of all your earnings & deductions called a P60. Keep this safe in a folder.
Gross PayThe total money you earn for all the hours you work. Normal working hours & out of hours work, before deductions.
Basic PayThe money you earn for a 40 hour week. This gets multiplied up for working weekends & nights
Extras are called “banding” under the old contract or “allowances/premia” under the new contract.
DeductionsThings taken away from your gross pay before you get the money. They are based on a percentage of your salary that changes the more you earn.
– Income Tax
– National Insurance
– Pensions
– Student Loans
– Others e.g. mess fees, parking permit
Net PayYour take-home pay: Gross Pay minus Deductions
PAYE“Pay as you Earn”: the way in which deductions are taken out automatically each month by your employer and paid to HMRC

How is pay calculated?

The calculations and amounts vary across the country (England, Scotland, Wales & Northern Ireland). They are subject to annual review (by the DDRB) and are published by NHS Employers Pay Circulars.

Your basic pay as an FY1 in 2021/2022

  • In England: Nodal point 1 £28,808/year
  • In Scotland: minimum £25,691/year
  • In Wales: minimum £24,818/year
  • In Northern Ireland: minimum £24,142/year

This is your minimum pay accounting for 40 hours per week. You will receive further pay for working nights, weekends or more hours per week – but exactly how this is calculated depends on the contract you are following. In England, the new contract (2016, updated in 2019) is being used whereas in Scotland the old contact (2002) remains in use.

New Contract (2016): Allowances & Premia

Gross pay is made up of basic pay & pay for additional hours, night duty & weekends. This is averaged over the rota, which means you earn a stable average amount each month. You should find the calculations & final amount in your work schedule that you should receive 8 weeks prior to starting work. Separately, there is additional pay for working in London (£2,162 per year) & doing specialist training in a hard to fill specialty e.g. psychiatry or A&E.

  • Basic pay: the minimum salary for working a 40 hour week
  • Additional hours: pay for every hour beyond 40 hours you work (1/40th for each hour)
  • Night pay: 37% enhancement for each hour you work between 9 pm & 7 am
  • Weekend Allowance: in addition to being paid for the average number of hours you work, you’re given a certain % extra basic pay depending on how frequently you work weekends e.g. for 1 in 2 weekends that is 10% and for 1 in 8 it is 3%

This is further explained by the BMA here with an example payslip below. Pay for LTFT trainees is also explained.

22132
Old Contract (2002): Banding 

For those on the old contract (Scotland), banding increases your salary if you’re working more than 40 hours depending on how many antisocial hours you do. Classically 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

Note that the financial year starts in April, whereas you will likely start in August. This means your usual tax-free allowance of £12,750 is spread over 8 months rather than 12, boosting your salary initially. Furthermore, fluctuations in your on-call pattern massively change your monthly wage, therefore do not plan your entire year’s finances on your first month’s pay.

Student Loans

If you took a student loan, you begin repayment the following April after you graduate. However, a previous loan for a previous degree may mean you start paying back immediately. This is certainly relevant if you studied Graduate Entry Medicine or entered medicine as a graduate. 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 £2,214 per month (gross pay) e.g. if you earn £2500 that’s £25.74 per month [(2500-2214)*0.09)]
Pension Contributions

Anyone starting as a doctor in the NHS will be enrolled in the 2015 Pension Scheme. The scheme is a career average revalued earnings (CARE) scheme and more information can be found here. Typically you pay 9.3% of your basic pay & your employer also makes a contribution on your behalf (20.68%). 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.

The following table outlines your pension contributions as your salary increases. The pension contribution is calculated using your basic salary after any salary sacrifice amounts (car lease, childcare vouchers, cycle to work schemes) have been deducted but before tax and student loan have been deducted.

Salary RangeContribution Rate
Up to £15,431.995.0%
£15,432.00 to £21,477.995.6%
£21,478.00 to £26,823.997.1%
£26,824.00 to £47,845.999.3%
£47,846.00 to £70,630.9912.5%
£70,631.00 to £111,376.9913.5%
£111,377.00 and over14.5%
From NHS Business Service Authority
Income Tax

The amount of tax you pay is dependant on your tax code. For most new employees, you will have a tax-free allowance of £12,750 and this 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, replace the last digit of the tax-free personal allowance with “L”. E.g. 1275L = £12,750. However, for example, it might be 1280L if you claim back tax on the £52 GMC fees.

Currently, in England, Wales & Northern Ireland you pay 20% on anything you earn from £12,751 to £50,270. In Scotland, you pay very slightly different rates. The table below outlines the tax thresholds and income tax they attract.

BandTaxable IncomeTax Rate
Personal Allowance£12,5700%
Basic Rate£12,571 – £50,27020%
Higher Rate£50,271 – £150,00040%
Additional Rateover £150,00045%
From HMRC

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 a single source of income. Even if you do have more than one source of income, it may be easier to get these factored into 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.

National Insurance

National insurance is a fixed amount you pay depending on how much you earn. Currently, for the first £9,500, you pay nothing. Beyond this, you pay 12% on anything up to £50,000. Finally, 2% on anything you earn above £50,000. The amount will vary over time especially if there are fluctuations in your salary (it may even be negative). However, ultimately it’ll be adjusted automatically so you pay the right amount.

Further Resources

Written by Dr Akash Doshi (ST3) & Dr Cyra Asher (ACA, FY1)

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4 thoughts on “Payslips & Income Tax”

  1. I have received my first NHS salary this month. I heard some myths from my friends that we might not need to go through tax deductions for first 3 or 4 months. Is that true?

    1. Different payrolls will calculate it differently. In effect, some may either apply your x/12mths of your £12,750 personal allowance all at once in your first payslip or across your payslips. By April 5th, you should have £12,750 not taxed and the remaining amount taxed at 20% income tax. It does tend to even out by the end of the year but you can keep an eye on all the tax you pay through your personal tax account on Government Gateway.

  2. Currently for LTFT training the pension contribution isn’t pro rata – the % is still based on the full time salary (so as a 60% F1 I still contribute 9.3%, even though my actual base salary would normally put me in the 5.6% bracket!). ? Think the BMA are trying to change this though

    1. Thank you for your comment! The contribution bracket is certainly based on your full-time equivalent salary but as your gross (pre-tax) pay is pro-rata, it will be 9.3% of that number. Lowering the bracket does make sense as your overall pension will be calculated based on the pro-rata’d annual salary. Thank you for flagging this up!

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