If you’re a salaried doctor employed by the NHS, then your earnings will be taxed at source, through a system known as Pay As You Earn (PAYE). 

Mostly everyone in the UK will be allowed a tax-free personal allowance, which as of the 2022/23 tax year stands at £12,570. There is an exception to the Personal allowance, however, which is when your adjusted net income is over £100,000. At this stage, every £2 you earn above this decreases your personal allowance by £1. This is a very important income tax rule to be aware of for doctors. At this stage, you’ll also need to do a Self-Assessment tax return. 

Income tax rates and bands – England, Wales, Northern Ireland

Band

Taxable income

Tax rate

Personal allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £150,000 40%
Additional rate Over £150,000 45%

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Income tax rates and bands – Scotland

Band

Taxable income

Tax rate

Personal allowance Up to £12,570 0%
Starter rate £12,571 to £14,732 19%
Basic rate £14,733 to £25,688 20%
Intermediate rate £25,689 to £43,662 21%
Higher rate £43,663 to £150,000 41%
Top rate Over £150,000 46%

Note that you do not get a Personal Allowance on taxable income over £125,140.

National Insurance

National Insurance is a mandatory tax paid by both employers and employees on salaries and on profits for Self-Employed individuals. For employees it will be deducted at source, much in the same way as income tax is taken off and detailed on your payslip. It is paid to ensure you qualify for some benefits and, more importantly, a pension from the state. Self-employed individuals will pay their National Insurance via Self-Assessment.

There are six types of National Insurance but I’ll only mention three here (note that all figures given below are for the tax year ended 5 April 2023 i.e. 2022/23.)

For employees the key type of National Insurance is called Class 1 Primary National Insurance which is paid on earnings from employment. Class 1 Secondary National Insurance is paid by employers on these earnings (it is these employer contributions that account for the majority of the revenue raised from NIC.) Using yearly numbers, the first £12,570 of earnings in the tax year is charged at 0%, between £12,570 and £50,270 is charged at 13.25% and above £50,270 at 3.25%. 

For self-employed individuals (which may be relevant for those locuming for example) the following are relevant:

  • Class 2 National Insurance is paid by self-employed people, if applicable, and is charged at a flat weekly rate which is currently £3.15 per week.
  • Class 4 National Insurance is paid on profits from trade. On profits between £11,908 and £50,270 per year, the main rate of Class 4 NIC is 10.25% so slightly lower than for employees (13.25%). From next tax year Class 4 NIC will be charged on profits from £12,570 and £50,270.

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