Taxation is a mandatory obligation for all individuals residing in the UK, including those working within the NHS. The tax system employed is commonly referred to as P.A.Y.E, which stands for Pay As You Earn. As the name suggests, this system ensures that taxes are deducted directly from your earnings as you receive them.
Within the NHS, these deductions are automatically withheld from your pay, alongside pension contributions and National Insurance contributions. This streamlined process simplifies the payment of taxes, ensuring compliance and the smooth functioning of the healthcare system.
2023/2024 Tax Year
Effective from the 1st of April 2023, the tax rates for the 2023/2024 fiscal year are outlined below. While the majority of tax rates remain unchanged, there has been an adjustment in the highest bracket. The 45% tax bracket has been reduced from £150,000 to just over £125,000. Consequently, individuals will now reach the 45% tax bracket at a lower income threshold.
Here is a breakdown of the tax rates:
If your annual income is £12,570 or less, you will not be required to pay any income tax.
- For incomes between £12,570 and £50,270 per year, you will be subject to a 20% tax rate on the earnings falling within this range.
- If your annual income exceeds £50,270, you will be taxed at a rate of 40% on all earnings above this threshold, as well as 20% on the income between £12,570 and £50,270.
- Individuals earning over £125,140 will be subject to the tax rates applicable to the 20% bracket, 40% bracket, and an additional 45% on any income exceeding £125,140 per year.
These revised tax rates reflect adjustments made to the income thresholds and rates for the upcoming tax year. It is important to stay updated on the current tax regulations to ensure compliance with the applicable tax liabilities.
| Band | Earnings | % of Tax |
|---|---|---|
| Tax Free | Up to £12,570 a year or £1,048 a month | Zero |
| Basic Rate | Up to £50,270 a year or £4,189 a month | 20% |
| Higher | Up to £125,140 a year or £10,428 a month | 40% |
| Additional | Anything over £125,140 a year or £10,428 a month | 45% |
2022/23 Tax Year
● If your annual income is £12,570 or less, you will not be required to pay any income tax.
● For incomes ranging from £12,570.01 to £50,270 per year, a tax rate of 20% will be applied to the earnings falling within this range.
● If your annual income exceeds £50,270.01, you will be subject to a 40% tax rate on all earnings above this threshold, as well as a 20% tax rate on the income between £12,570.01 and £50,270.
● Individuals earning over £150,000 will be subject to the tax rates applicable to the 20% bracket, the 40% bracket, and an additional 45% on any income exceeding £150,000 per year.
| Band | Earnings | % of Tax |
|---|---|---|
| Tax Free | Up to £12,570.00 a year or £1,047.50 a month | Zero |
| Basic Rate | Up to £50,270.00 a year or £4,189.17 a month | 20% |
| Higher | Up to £150,000.00 a year or £12,500.00 a month | 40% |
| Additional | Up to £150,000.01 a year or over £12,500 a month | 45% |
The tax information provided above serves as a general guide for NHS staff members. The outlined tax brackets are applicable to the majority of individuals working within the NHS.
However, it is important to note that certain individuals may have unique circumstances that warrant a different tax code. This could arise due to factors such as ongoing tax arrears repayment or being placed on an emergency tax code.
If you find yourself uncertain about your specific tax situation, it is always advisable to seek clarification from your relevant Payroll Department. They will be equipped to provide accurate and personalized guidance based on your circumstances.
It’s worth noting that there are other reasons why individuals may fall under different tax brackets, such as participation in various salary sacrifice schemes like the NHS cycle to work scheme or different car lease options.
By consulting the appropriate authorities and keeping yourself well-informed, you can ensure that you have a clear understanding of your tax obligations and any specific considerations that may apply to your individual situation within the NHS.
