SoR highlights government ‘tax grab’ on England’s NHS pay award

Radiographers pushed in to higher tax brackets by the timing and structure of payments

Published: 25 May 2023 Trade Union & IR

An SoR analysis has exposed the paucity of England’s 5% NHS pay award - and the Society is now highlighting the issue in a briefing paper for MPs.

The paper explains to MPs why the SoR is balloting members on strike action in June after the health secretary failed to respond to the request for a meeting following members’ overwhelming rejection of the offer.

Dean Rogers, SoR Executive Director of Industrial Strategy & Member Relations, said: “Patients are waiting longer than they should for diagnosis and cancer treatment because there are not enough imaging staff, and another year’s below-inflation pay award is prompting more to leave. Something needs to change but this year’s award will make things harder for many and adds insult to injury.

Freezing tax thresholds

“Every year a good proportion of any NHS pay award is immediately recovered by the government, because it takes back income tax, national insurance and also because NHS pension contributions go straight to the Treasury. For lower rate taxpayers, this is around 42p in every extra pound. 

“By freezing tax thresholds, more of any award is recovered and more staff get closer to the £50,270 threshold for paying 40% income tax. At this point, parents also start to lose some of their child benefit payments. For those earning more than £50,270, the recovered amount goes up to between 64p and 67.5p in every pound.”

Dean said that this year the tax grab was higher than usual. As all of the non-consolidated and additional elements of the 2022-23 award are being paid in the 2023-24 tax year, they count against the same year’s thresholds.

Impact on Bands 6 and 7

“Our analysis shows this means that almost all of Band 7 and most of Band 6 will now, in practice, be paying at the higher 40% tax rate on all of the increase. The top of Band 7 is usually below the threshold but the back pay from last year will take them well over. We know that most of our members have one or more regular additional allowances for working unsocial and additional hours. These will also now take most of Band 7 over the threshold in 2023-24 where normally they would not.”

Even in Band 6, most will likely be impacted if they work regular overtime. And even at the entry point of Band 6, a member earning £1,072 extra in overtime a month before tax would now move into the higher tax bracket.

Dean continued: “To add insult to injury, we also understand that the secretary of state is only willing to fund 60% of the 5% consolidated award in 2023-24. The NHS is being expected to find the remainder from within existing budgets. This means that most NHS professionals will actually be paying the government more back in tax than the government has directly invested in the award. That’s remarkable, and amplifies why radiographers have had enough of being undervalued.”