Tax on NHS bank shifts

NHS bank shifts are taxed as ordinary employment income, at the same rates as your salary. How the tax is taken depends on whether the bank belongs to your main employer. Shifts through your own trust’s bank usually go on the same payroll and tax code as your contract. Shifts for another trust, or for a bank run by a separate company, count as a second job. Your main job has already used your allowance, so they should be taxed at a flat 20 per cent under a BR code, with the National Insurance threshold applied to them separately.

Bank work at your own trust

Payroll normally adds same-trust bank pay to your monthly salary, and one tax code covers the lot.

Bank pay is taxed at your marginal rate, which for most nurses and healthcare support workers in England is 20 per cent Income Tax plus 8 per cent National Insurance. A student loan takes a further 9 per cent above the monthly threshold, which for Plan 2 is £2,448.75. A heavy month of shifts can make a payslip look hard hit, but PAYE works across the year and the tax taken is the same as if the extra pay had been spread out. Is overtime taxed more? explains why.

Bank pay that takes your taxable income above £50,270 for the year is taxed on the excess at 40 per cent in England, Wales and Northern Ireland. In Scotland the 42 per cent higher rate starts from £43,663.

Bank work for a different employer

A separate bank employer counts as a second job for HMRC. You have one personal allowance of £12,570, normally given to your main job, so the second employment should get a code with no allowance.

Code on the bank job	What it does	When it is right
BR	Taxes all pay at 20%	Main job uses your allowance and total income stays under £50,270
D0	Taxes all pay at 40%	Main job already takes you into the higher rate
0T	Gives no allowance, taxes through the normal bands	Usually a holding code when the employer lacks your details
1257L	Gives the full allowance	Only right if this is your only or main job

For Scottish taxpayers the equivalents are SBR, SD0 and so on; for Welsh taxpayers CBR and CD0.

National Insurance works differently from Income Tax. Each employer applies the threshold separately, so a separate bank employer only takes National Insurance when your bank pay in a pay period exceeds £242 a week or £1,048 a month. Each employer also applies student loan thresholds on its own.

Common code problems

Most problems start with the starter checklist, where you tick a statement saying whether this is your only job or whether you have another job or pension. Tick the wrong one and the bank may use 1257L, giving you a second allowance. You then pay too little tax all year, and the shortfall is collected later, usually through your tax code the following year.

A bank with no starter information may use an emergency code, which hands you part of an allowance you have already used, or 0T, which takes too much if the bank work turns out to be your main income.

A third problem arises when bank income overtakes contract income, or you cut your contracted hours, and HMRC leaves your allowance on the wrong job. If your main job pays less than £12,570 a year, you can ask HMRC to split the allowance so each job gets part of it.

How to check and fix your code

Your payslips show the code each employer is using, and so do your HMRC personal tax account and the HMRC app. The account also shows HMRC’s estimate of your income from each job, which it uses to set your codes, so if the figure for your bank work is far off, update it there.

If a code looks wrong, contact HMRC through your personal tax account or by phone. Have your National Insurance number, both employers’ PAYE references from your payslips, and a realistic figure for your expected bank earnings. HMRC sends the new codes to the employers, and tax overpaid so far in the year is normally refunded through payroll. Tax codes explained and BR tax code go into each code in more detail.

At the end of the tax year

Each employer gives you a P60 after 5 April, and adding them together shows your total income and tax. If you have been on BR for bank work and your total income was below £50,270, the tax should be close to right. Underpaid tax is usually collected through a later tax code, and overpaid tax can be claimed back. Agency shifts, as distinct from bank work, are paid through the agency’s payroll in the same way as a separate bank. NHS bank work covers the contract side, and the take-home pay calculator shows the effect of extra pay on your main job.