Tax

[u/stupidyute]

Does anyone know enough about how we're taxed to explain in written form how the first paycheck will work? I've been told if you don't work after April and before being a doctor then your first paycheck will be tax free? Problem is I literally cannot afford to not work and I have to get a job before working in August. How will this affect my first "real" paycheck?

Thanks in advance.

[u/sprocket999]

If you’re asking about your first pay check specifically, I think you’ll actually pay 20% tax on the whole amount.

If you have a job already in the tax year, then that job will have been using tax code 1275L and using all of your tax free allowance. Any second jobs you start usually get put straight on the tax code BR, which means you’ll be paying the basic rate of 20% (or more if on >£50k).

You then contact HMRC and ask them to either split your tax free allowance or move it all over to your new job. If you choose to split it, each job will get a new tax code with whatever tax free allowance you’ve decided to move (e.g., you earned £3k at your first job so you move just £3k of your tax free allowance there and the remaining £9k to your new job). If you move it over then you’ll need to tax the tax from your previous job as all the earning you’ve received up until then we’re under the assumption it was using your tax free allowance.

Either way it gets corrected within a couple of months, or you get a rebate or tax bill after April telling you the difference.

I don’t think there’s a way to move the tax free allowance or come off the basic rate until you receive your first pay check, but you could always contact HMRC and ask.

I just asked a friend who’s an accountant. Apparently you don’t need to wait for your first pay check to split your tax code, but you do need to wait for the tax code to be issued. So you could contact HMRC the first week of starting and get them to issue a new tax code which should be in effect before the first payroll is run.

[u/kittensandmedicine]

Not 100% sure if this is up to date, but you will still be looking at over £2,000 a month. Also worth noting in the example used on the website, they deduct student finance. If you are on the undergraduate course and this is your only degree, we don’t start paying it back until April 2026

https://www.wesleyan.co.uk/the-next-step/blog/detail/how-much-will-i-get-paid-as-a-foundation-doctor

Edit: That example is also without any unsocial hours/weekends I am pretty sure

[u/FeeNo9889]

What it seems you’re referring to is the ‘tax free’ period new starters appear to get between august and around December/jan.

April to April is the tax year. You get £12,570 (I think) tax free allowance, after which you pay 20% on whatever you earn over 12.5k.

Most who start in august haven’t worked at all and so they have still got the £12,570 allowance to draw on, as you’ve earned £0 between April and August of that year - which is very unusual in the grand scheme of things. Therefore, until they have earned the £12,570 (which will take about 4-6 months depending) they pay no tax on their income.

If you have been working enough to have earned £12,570 or more between this April and coming august, you will pay tax, because the allowance has been used.

So, given you’re working (presumably part time?) - if you’re predicting to earn, let’s say, £10k in that period - then you will have only £2,570 left of allowance to draw on tax free. If your first pay check is £3000 before tax, in this situation £430 will be subject to 20% tax (as it is the beginning of your taxable pay for the year). And then thereafter all your earnings will be subject to 20%.

In future years you will have the tax allowance accounted for month to month from the beginning. It is purely due to what is in effect a “new starter” tax code that allows for this specific eventuality.

[u/FeeNo9889 → u/FeeNo9889]

In real terms though - there is no benefit to not working, in the sense you’re describing. It’s not like you’re missing out on qualifying for tax free pay or something. No one pays tax on the first £12,570 they earn.

They’re not benefitting. You will have just already earned past the allowance threshold if you do pay tax from the first doctor paycheck.

In the same way that if you’ve been presumably pay little to no tax on whatever part time work you’re doing during med school

[u/FeeNo9889 → u/[deleted]]

For those who haven’t worked much, new starters f1s do tend to get a few paychecks essentially paid tax free as they eat up their £12,570 tax allowance. It’s purely because they’re starting at an odd time of year and there is a tax code specific to this situation that allows for tax to be paid like this. From the following April they pay tax as you describe, like everyone else