Taxation in the UK

The UK is a welfare state, which means that the state is responsible for its people. In simple words, among numerous other facilities, healthcare and education are free in the UK. These facilities are also free for international medical graduates working as doctors in the UK and their families (family includes partner and children; it does not include parents).

Since we get a lot of returns, paying taxes in the UK does not feel like a bad deal.

 

Amount of Tax Deduction

Depending on their grade, 17% to 27% tax is deducted from a junior doctor’s salary.

 

Calculation of Tax Deduction

There are two forms of tax deductions from the pay:

  1. Income tax.
  2. National insurance.

 

1. Income Tax

Annual Earning Tax Deduction
Up to £11,850 0%
£11,851 to £46,350 20%
£46,351 to £150,000 40%

You can confirm these numbers from the UK Government’s official website.

Since junior doctors earn somewhere between £30,000 to £40,000, the tax deduction for them would be 20%. And this 20% tax deduction is also only on their pay between £11,001 to £43,000. Which means that their first £11,000 will be tax-free.

 

2. National Insurance

Annual Earning Tax Deduction
Up to £8,424 0%
£8,425 to £46,356 12%
Over £46,356 2%

You can confirm these numbers from the UK Government’s official website.

Since junior doctors earn somewhere between £30,000 to £40,000, the tax deduction for them would be 12%. And this 12% tax deduction is also only on their pay between £8,160 to £45,000. Which means that their first £8,160 will be tax-free.

 

Summary of Total Taxation

For most junior doctors, the Income Tax deduction and the National Insurance deduction totals to around 20 to 25 percent tax deduction from their salary.

 

Useful Links

 

Frequently Asked Questions

1. How much pay is enough in the UK?

It depends on your lifestyle, location, number of dependents and a few other factors. But the following might give you a general idea:

£1,900/month can be more than enough for a single person and just enough for a couple.

£2,700/month can be more than enough for a couple.

 

2. Would I be able to save money in the UK?

Again, it depends on the factors mentioned above. So savings can be different for every individual.

I have seen people save £1,000/month for a whole year and I have seen people not save anything even after a couple of years. So it depends on each individual and how they live.

 

3. How much tax would I have to pay in the UK?

The monthly salaries mentioned in this article are exclusive of tax. These are the take-home salaries, after tax deduction. However, to learn more about pay scales and taxation in the UK, you can click here.

 

4. How much tax would I have to pay on annual earning of £30,000?

There will be two components of tax deductions from your salary.

A. Income tax.
B. National insurance.

 

A. Income Tax on Annual Earning of £30,000

The initial £11,000 would be free of tax. 20% income tax would be deducted from your pay between £11,851 and £30,000.

Earning Deduction % Deduction £
Up to £11,850 0% £0
£11,851 to £30,000 20% £3,629

Total annual income tax deduction: £3,629

 

B. National Insurance on Annual Earning of £30,000

The initial £8,160 would be free of tax. 12% national insurance would be deducted from your pay between £8,160 and £30,000.

Earning Deduction % Deduction £
Up to £8,424 0% £0
£8,425 to £30,000 12% £2,589

Total annual national insurance deduction: £2,589

 

Total Taxation on Annual Earning of £30,000

£3,629 + £2,589 = £6,218

£6,420 = 20.7% of £30,000

Therefore, the total annual tax deduction on annual earning of £30,000 will be £6,218. This equal to 20.7% of the total earning.

 

5. How much tax would I have to pay on annual earning of £48,000?

There will be two components of tax deductions from your salary.

A. Income tax.
B. National insurance.

 

A. Income Tax on Annual Earning of £48,000

The initial £11,850 would be free of tax. 20% income tax would be deducted from your pay between £11,851 and £46,350. 40% income tax would only be deducted from your pay between £46,351 and £48,000.

Earning Deduction % Deduction £
Up to £11,850 0% £0
£11,851 to £46,350 20% £6,953
£46,351 to £48,000 40% £659

Total annual income tax deduction: £7,652

 

B. National Insurance on Annual Earning of £48,000

The initial £8,424 would be free of tax. 12% national insurance would be deducted from your pay between £8,425 and £46,356.

Earning Deduction % Deduction £
Up to £8,424 0% £0
£8,425 to £46,356 12% £4,551
£46,357 to £48,000 2% £32

Total annual national insurance deduction: £4,583

 

Total Taxation on Annual Earning of £48,000

£7,652 + £4,583 = £12,235

£12,235 = 25.4% of £48,000

Therefore, the total annual tax deduction on annual earning of £48,000 will be £12,235. This equal to 25.4% of the total earning.

 

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