More than 11,000 NHS workers who overpaid tax and national insurance while training have applied for a refund since April, with many more thought to be owed money – but those reclaiming face a "long, laborious and inconsistent" process.
MoneySavingExpert.com first revealed that 10,000s of NHS workers could be due refunds in July, after a month-long investigation into HM Revenue & Customs' complex reclaiming rules.
We've since been campaigning to raise awareness of the problem, which affects many nurses, midwives, health visitors, doctors and other NHS workers who took part in the Widening Access Training (WAT) scheme at some point since 1999.
New figures published last month confirmed the huge scale of overcharging. HMRC revealed 16,762 refund applications have been made since April 2013, with a huge spike this year which has seen 11,218 apply since April.
Overall 8,209 NHS workers have so far received a refund, with more awaiting a decision. But there are still no official figures for how many could be eligible to reclaim – we believe this could run into the 10,000s.
Those who have tried to reclaim have reported a chaotic system, with one MP who has been helping NHS staff condemning a "very slow" process and a "lack of clarity" on the rules. For full help, see our NHS Tax Reclaim guide.
Why are some NHS workers owed refunds?
The issue affects current and former NHS staff who took part in the WAT scheme at any point since 1999. Designed to broaden the professional knowledge of NHS workers, the scheme sees them undertake full-time training at colleges and universities.
But the problem is that payments they got while training were taxed as if it was paid work. As they were on a training scheme which offered some exemption, some should never have paid the tax and national insurance which they did – and they can reclaim.
See full details of how to check if you overpaid in How do I know if I can reclaim?
How many are affected?
Until recently there haven't been any published figures on the scale of the problem. But in response to written parliamentary questions from two MPs, HMRC has published the following figures.
HMRC's NHS WAT scheme figures
|Refunds received for overpaid tax and NI while on NHS WAT schemes (1)
|Applications processed (2)
|Information provided by Jane Ellison MP, Financial Secretary to the Treasury, through questions from Catherine West MP and David Hanson MP. Figures include claims made through NHS trusts and directly through HMRC. (1) Until 18 July 2016. (2) Until 19 October 2016.
These figures only represent those who have claimed, though, rather than those who may have been overcharged – and they only cover the period since 2013.
Neither the NHS nor HMRC has been able to give us any estimate for the the total number of NHS workers who have been overcharged and who therefore may be able to reclaim, but we believe it's likely to be 10,000s.
Reclaim process 'an utter shambles'
Dozens of NHS workers have written to us to criticise the handling of refunds by HMRC and NHS trusts.
One group of health visitors told us they'd encountered a "long, laborious, inconsistent process, with several anomalies, limited communication and no explanation for vast differences in amounts paid back".
MoneySavingExpert managing editor Guy Anker, who appeared on the BBC's Victoria Derbyshire programme today to discuss the problem, says: "It's an utter shambles between HMRC and the NHS trusts.
"There is confusion about the rules, variances in what claimants get, and despite it being money they never should have paid in the first place, employees are essentially being put off from getting their money back.
"HMRC needs to issue clear guidance on both tax and national insurance rebates to all trusts and regardless of who's at fault, anyone enrolled in this scheme going forward needs to have the correct deductions made automatically through payroll."
The good news is that since we published our investigation back in July we've heard of many reclaim successes – these are typically for at least £1,000, while one psychologist told us he reclaimed an astonishing £13,500.
Why are staff struggling to reclaim?
In 2013 the process for reclaiming changed, with applicants for refunds now expected to approach their NHS trusts instead of applying directly to HMRC.
However some trusts are still failing to support these applications, meaning former trainees must go to HMRC anyway. In some cases HMRC sends them back to the trusts for more supporting evidence, meaning they're caught between the two bodies.
David Hanson, the Labour MP for Delyn in North Wales who has helped constituents apply for refunds, says the Government must address "a lack of clarity on the process, the speed of the process and give clearer information on what trainees are owed and when it will be repaid".
He adds: "The response [to applicants] seems to be very slow given that the Government has indicated that this money should be repaid."
What do HMRC and the NHS say?
We asked HMRC why there was still widespread confusion about the process, and why applicants were reporting waiting times of many months to receive a decision.
HMRC says repayments are being made within its "normal timelines" – though it hasn't specified what those timelines are. It also says it's "still looking to improve turnaround times".
A spokesperson adds: "We are working closely with NHS trusts to ensure that all those who overpaid receive refunds as soon as possible. This may take some time depending on the quality of information provided to us."
HMRC says it will help the reclaim process if those applying "do some basic checks first" before reclaiming. These are:
- Were you in full-time training, and do you have a letter confirming this?
- Do you have copies of any certificates received for completing training?
- Have you checked with your NHS payroll department to be sure payments you received at the time were for training only?
We also approached NHS England for comment on how trusts are handling refund applications, but it declined to respond.