Tax on an NHS Bank Job or Second Job: BR Codes and NI Explained

Many NHS staff hold a bank contract alongside their substantive post, either with their own trust or another one. Others work a second job outside the NHS. Either way, the tax on that second income often confuses people. Here is how it works.

Why the second job is taxed at 20% straight away

Everyone gets one tax-free personal allowance of £12,570 a year. HMRC normally gives all of it to your main job, through tax code 1257L. Your second job then gets a code that gives no allowance at all.

The most common is code BR, which taxes every pound at the basic rate of 20%. If your main job already uses the whole basic rate band, the second job should be on code D0 instead, which taxes everything at 40%.

National Insurance is separate for each job

National Insurance does not work the same way as tax. Each job is assessed on its own, and you only pay NI on the earnings in that job above the threshold. So a small second job may pay no NI at all, even if you earn plenty in your main post.

A worked example

A Band 5 nurse earns £6,000 a year from bank shifts with a different employer.

• Tax on code BR: 20% of £6,000, which is £1,200 a year, or £100 a month
• National Insurance: none, because £6,000 is below the yearly threshold
• Kept: £4,800 a year, or £400 a month

If the bank shifts were through the same employer as the main job, payroll may treat the pay together, and NI would then apply to it.

Will I owe tax at the end of the year?

Code BR works well if your total income stays within the basic rate band. Problems arise if your main job plus your second job takes you over the higher rate threshold of £50,270. In that case BR takes too little on the part above the threshold, and you may owe tax afterwards. HMRC usually collects this by adjusting your tax code the following year.

The opposite can happen too. If your main job income is low enough that you do not use your whole personal allowance, BR takes too much. You can ask HMRC to split your allowance between the two jobs.

Pension on bank work

You can usually join the NHS Pension on bank work. Your contribution tier is based on the pay from that contract alone, so it is often in a lower tier than your main job. Bank pensionable pay also builds pension in the 2015 scheme.

Check your tax codes

You can see both tax codes in your HMRC online account or the HMRC app. If something looks wrong, for example a second job on 1257L as well, contact HMRC early to avoid an underpayment.

Worked example: going over the higher rate threshold

A Band 7 at the top point earns £56,515 in her main job, already above the higher rate threshold. She also earns £5,000 a year from bank shifts at another trust. Because her main job uses up the basic rate band, her bank job should be on code D0, taking 40% tax. If it is wrongly on BR, only 20% is taken, and she could owe about £1,000 in tax for the year.

Common questions

Can I split my personal allowance? Yes. If your main job does not use all of it, HMRC can give part of it to the second job. Contact HMRC through your online account.

Why is NI taken from my bank pay at the same trust? If both contracts are with the same employer, earnings are normally added together for National Insurance.

Do I need to fill in a Self Assessment return? Usually not, if all income is taxed through PAYE. You may need one if you owe tax that cannot be collected through your code or have other untaxed income.

Common mistakes to avoid

• Having 1257L on both jobs, which gives you the allowance twice and leads to a tax bill.
• Ignoring a letter from HMRC about a tax code change for the second job.

Work out your second job

The bank job and second job tax calculator shows the tax and NI on your second income, what you keep each month, and whether you are likely to owe or be owed tax at the end of the year.