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 £11,000 0%
£11,001 to £43,000 20%
£43,001 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 £8,160 0%
£8,160 to £45,000 12%
Over £45,000 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.

 

Frequently Asked Questions

1. How Much Pay is Enough?

It depends on your lifestyle and it depends on where you are living. For example, big cities like London and Manchester are more expensive than small towns like Blackpool. But the following might give you a general idea:

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

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

 

2. Would I be Able To Save Money?

Again, that depends on your lifestyle and the area where you choose to live. And, of course, it depends on your salary. It also depends on you being single or living with a spouse.

I’ve seen people with £2,700/month, save £1,000/month for a whole year and I have seen people with £1,900/month not save anything for a year. So it depends on each individual and how they live.

 

3. 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 £11,001 and £30,000.

Earning Deduction % Deduction £
Up to £11,000 0% £0
£11,001 to £30,000 20% £3,800

Total annual income tax deduction: £3,800

 

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 £8,160 0% £0
£8,160 to £30,000 12% £2,620

Total annual national insurance deduction: £2,620

 

Total Taxation on Annual Earning of £30,000:

£3,800 + £2,620 = £6,420

£6,420 = 21.4% of £30,000

Therefore, the total annual tax deduction on annual earning of £30,000 will be £6,420. This equal to 21.4% of the total earning.

 

4. 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 £11,000 would be free of tax. 20% income tax would be deducted from your pay between £11,001 and £43,000. 40% income tax would only be deducted from your pay between £43,001 and £48,000.

Earning Deduction % Deduction £
Up to £11,000 0% £0
£11,001 to £43,000 20% £6,400
£43,001 to £48,000 40% £2,000

Total annual income tax deduction: £8,400

 

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

The initial £8,160 would be free of tax. 12% national insurance would be deducted from your pay between £8,160 and £48,000.

Earning Deduction % Deduction £
Up to £8,160 0% £0
£8,160 to £45,000 12% £4,420
£45,001 to £48,000 2% £60

Total annual national insurance deduction: £4,480

 

Total Taxation on Annual Earning of £48,000:

£8,400 + £4,480 = £12,880

£12,880 = 26.8% of £48,000

Therefore, the total annual tax deduction on annual earning of £48,000 will be £12,880. This equal to 26.8% of the total earning.

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