It’s that time of year when our new FY1 colleagues are starting their first jobs throughout the country and if you have just started then welcome! We really hope that you are settling into your new roles! You’ll soon be receiving your first pay into your bank account (if you haven’t already) and with that will come your first payslip – exciting times but what does it all mean?
In this blog Ed (a salaried GP but also a chartered accountant and chartered tax advisor) talks you through your first payslip, explains what your tax code is and gets you ready to claim tax relief on your professional expenses as a doctor. We have loads of resources to help you with your finances throughout your career as a doctor – this is just the start!
If you’d rather listen to our podcast or watch our YouTube video check out our podcast and YouTube channel.
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The 2016 NHS Payslip
Personal Information
The top of your payslip will give your personal details as well as details of your department, job title and salary.
Make sure that your Assignment Number matches that on your ESR and that your National Insurance Number is correct. You’ll find your “Tax Office Ref” here which you will need when you claim tax relief on your professional expenses and your “Tax Code” – more on below.
Your income
- Basic Pay: This is the basic pay for 40hrs (Full time). It will be for the number of hours you do if you’re LTFT. This is thee only component of your pay that is pensionable
- Addn Roster Hours NP: This is paid at the same rate as the basic pay and is for hours over the standard 40hrs. It is not pensionable, hence the “NP” in the description
- Night Duty 37%: There is a 37% uplift for night hours. Pay might be spread over your placement rather than as they are worked
- Weekend: There is a % uplift applied based on the lowest frequency of weekends on your placement. The uplift ranges from 15% for 1 weekend in 2 down to no uplift if you work at a frequency “less frequently than 1 weekend in 8”
If you live in Scotland, Wales or Northern Ireland your payslip will look different on this side – instead of extra amounts for night and weekends you will likely see a supplement amount for banding which is additional pay that basically depends on how “antisocial” the post is e.g. the more weekends and night shifts you have to do as part of the rota for the job, the higher the banding payment.
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Your deductions
You will see on the right of the payslip amounts that are being deducted from your pay. These will include:
- PAYE or “Pay As You Earn” – this is the income tax that you are paying this month on your taxable pay. Your payroll department will use your tax code to work out how much income tax you will be paying to the Government each month.
- National Insurance (“NI”) Contributions, basically your Social Security contributions for the month. To find out more about NI, head here to read more: https://medicsmoney.co.uk/national-insurance-doctors/
- NHS Pension. This is your pension contribution which is a % of your pensionable pay based on your annual pensionable pay. Only the basic pay is pensionable. The Tiers currently are:
| Pensionable Pay Range from 1 April 2025 | Contribution Rate from 1 April 2025 based on actual annual pensionable pay |
| Up to £13,259 | 5.2% |
| £13,260 to £27,797 | 6.5% |
| £27,798 to £33,868 | 8.3% |
| £33,869 to £50,845 | 9.8% |
| £50,846 to £65,190 | 10.7% |
| £65,191 and above | 12.5% |
For more on the NHS Pension why not check out our recent YouTube video? https://www.youtube.com/watch?v=uicKzy84Owg
- Student Loan. If you took out a Student Loan this will start to be deducted from your salary based on the Plan you are on. For more information about Student Loans you can find plenty here: https://medicsmoney.co.uk/the-most-comprehensive-guide-to-student-loans-for-medical-students/
Your Net Pay
At the very bottom you will find totals for the tax year to date and the current period along with your taxable pay and your net pay, the amount you will actually receive into your bank account. The taxable pay is the amount that your PAYE will be applied to rather than your gross pay and takes into account that your NHS Pension is tax deductible.
Your Tax Code
Your tax code is a code, in number and letter format, sent from HM Revenue and Customs (“HMRC”) to your Payroll department to help them work out how much tax to deduct from your taxable pay under the PAYE regime.
Most of us receive a tax-free Personal Allowance of £12,570 and this is the starting point for your tax code. The most common tax code throughout the UK is “1257L” – the number is the Personal Allowance divided by 10 and the L means you are entitled to the standard personal allowance; if your payroll receives this they know that they need to, multiply the number by 10, apply your personal allowance then start working their way through the tax rates and thresholds to work out your PAYE.
If you live in Scotland you may see an “S” before your Tax Code, whereas Welsh taxpayers will see a “C”.
The number you see may be higher or lower than 1257. If it is more than 1257, HMRC are giving you additional tax relief – when you make a claim to get the tax back on your professional expenses, HMRC should change your tax code to take these expenses into account and give you a slice of tax relief each month. If the number is lower than 1257 then HMRC have reduced your level of tax relief to claw back extra tax for some reason (this most commonly happens if people owe tax – HMRC will get that tax back through their tax code).
If you do have a different number than 1257 then log onto your Personal Tax Account to check what constitutes your tax code: https://www.gov.uk/personal-tax-account
You may see the phrase “CUMU” or “NONCUM” after your tax code. CUMU stands for cumulative and means that your tax position for the previous months of the tax year is taken into account when working our how much tax to deduct. As an example, a new FY1 starting in August who has not worked from April to August will likely not pay any tax in August as there will be Personal Allowance from the previous months that will be utilised (by the way, it’s great to not pay tax but watch out as when you do start paying tax your net pay will decrease so make sure you budget for this!). NONCUM means non-cumulative and they should apply one-twelfth of your personal allowance.
You may see letters other than L – these are usually “Emergency Tax Codes”. In particular these are:
- BR – HMRC do not give you any Personal Allowance and tax your income at 20%. Check out our YouTube video to see one of my payslips with this applied.
- D0 – HMRC do not give you any Personal Allowance and tax your income at 40%.
- D1 – HMRC do not give you any Personal Allowance and tax your income at 45%
- 0T – HMRC do not give you any Personal Allowance but will then work through the tax rates in sequence. They may do this if you have no more Personal Allowance left or you have moved jobs and they are trying to establish the correct tax code
- NT is a rare tax code where you do not pay tax
- If you see W1, M1 or X then HMRC are trying to establish the situation
Watch out if you move trusts, say when you move onto FY2, as HMRC often think we have more than one job and then apply an emergency tax code resulting in higher tax bills.
If you want to know more about tax codes you can find more here: https://medicsmoney.co.uk/is-your-doctors-tax-code-correct/
Claiming Tax Relief on your Professional Expenses
Throughout your career as a doctor you will incur a lot of employment expenses – your GMC fee, your professional indemnity fees, your BMA fee if applicable, and then later on your Royal College fees and those expensive exams.
You can claim allowable expenses against your employment income resulting in getting the tax back at your marginal rate – so in the early days of your career you will likely be a 20% taxpayer and will get 20% of the cost of your expenses back. Later on you will be a 40% taxpayer and will get 40% of the cost of your professional expenses back (note that in Scotland there are 6 tax rates as opposed to 3 in the rest of the UK). There are other rates that are not the official rates – these are known as “marginal tax rates” which you will need to be aware of when your income goes near or above certain thresholds especially £100,000 (more information here: https://medicsmoney.co.uk/your-marginal-tax-rate/)
You can claim expenses for the current tax year, with a tax year running from 6 April to the following 5 April, as well as the previous four tax years and the amounts can really rack up especially when you come to pay for your Royal College exams.
If you already complete a Self-Assessment Tax Return, you must claim your employment expenses on your tax return. Otherwise, when you are ready to claim tax relief on your employment expenses you must do so through your Personal Tax Account – you will need receipts to do so and you can follow our free step-by-step to make your claim: https://medicsmoney.co.uk/free-guide/
You may want to wait until the tax year has ended i.e. after 5 April to make your claim for that tax year.
Once you make your first claim, HMRC should change your tax code so that you get your tax relief spread over the tax year, assuming that your professional expenses will stay the same the following tax year. If your expenses change, and let’s face it they usually do go up each year, you can make further claims to get ensure you get tax relief on the increase.
Conclusion
Hopefully the above has been useful. If you’re just starting your career as a doctor then, again, welcome – and make sure you subscribe to our emails to get more information about how to manage your finances throughout your career as a doctor.
