If you are a doctor working in the NHS you no doubt feel you are overworked and overstressed.
What you may not know is that you are more likely to be incorrectly taxed than almost any other profession.
There are many reasons for this, not all of them will apply to all doctors but it is probable that some will apply to you.
The first thing to consider is your personal allowance. Everyone working in the UK is entitled to a tax free allowance against their earnings (currently £5,225 per year). This should be taken into account by your payroll department when your pay and tax is calculated. If the payroll department do not know your tax code they will probably apply a code of ”BR”. This means that all your earnings will be taxed at the basic rate of 22% and that you will not receive the benefit of your tax free allowance.
This can happen more frequently than you might imagine, particularly when you are on the training rotation and changing hospitals every six months. It is also becoming more common for payroll departments to continue to use an incorrect code for extended periods which can mean several tax years.
Another possible cause of error in Doctors’ taxation is that they pay too much tax because they do not claim their expenses. Subscriptions to many professional bodies such as the GMC; MDU and the Royal Colleges are claimable against your tax bill and can mean a substantial reduction. You will only get the benefit of this if you make a claim, it will not appear automatically.
A different type of problem can arise if you do locum work in addition to your main NHS post. Usually this will be carried out through an agency which will deduct tax and National Insurance and pay you a net figure.
The difficulty here is that each agency concerned will treat your earnings from that agency in isolation without looking at the overall picture (which they clearly cannot do). Normal agency practice is to deduct tax at a flat rate 22%.
This is fine up to a point but if your total gross earnings from the NHS and from locums exceed the higher rate tax threshold (currently approximately £39,000) you will not be paying enough tax on your locum work and could face a substantial and unexpected tax bill.
If you feel that any of the above applies to you, rest assured that we can help you to resolve matters. We can look not only at the current tax year but also at the previous six so if you have overpaid at any time over that period we can help.
Please give us a call for a free initial consultation of up to an hour so that we can discuss your own position in detail.
Michael Hankey
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