A number of NHS hospital trusts have put tax refund claims from staff on hold, while others are threatening to take back money already paid out, amid mounting confusion over whether NHS workers can reclaim tax and national insurance they paid while training.
One trust – Guy's and St Thomas' NHS Foundation Trust in London – is writing this week to four current or former employees to tell them they were given tax or national insurance refunds in error, after they claimed for having overpaid while on the Widening Access Training (WAT) scheme. It is trying to reclaim about £20,000 in total.
Two more trusts are warning staff that refunds which have already been issued may now be recouped, and at least five trusts have now paused claims relating to the WAT scheme, are refusing them altogether or are still deciding what approach to take.
The change of heart by some NHS trusts seems to have been prompted in part by new HM Revenue & Customs guidance issued in July this year, though HMRC itself says there was no significant change in this guidance, and other trusts are continuing to process refunds as normal.
MoneySavingExpert.com first revealed that 10,000s of NHS workers could be due refunds last year. Since then, many nurses, midwives, paramedics and other NHS workers who took part in the WAT scheme at some point since 1999 have successfully reclaimed £1,000s.
Why are some NHS workers due refunds?
The issue affects current and former NHS staff who since 1999 have taken part in the WAT scheme, which is designed to broaden the knowledge of nurses, midwives, health visitors, doctors, paramedics and others by giving them full-time training at colleges and universities.
The problem is the payments these NHS workers got while training were taxed as if this was paid work. Yet as they were on a training scheme which offered some exemption, some should never have paid tax and national insurance – and so some can reclaim.
The rules around claiming are complex, and how you do it depends on whether you were still technically an NHS employee at the time of your training, or if you had been moved onto an NHS 'contract of training'.
But for those who did overpay, this can mean serious money. Since we first published our NHS tax reclaim guide in July 2016, we've been inundated with success stories, with one paramedic reclaiming a whopping £18,700 in tax and NI contributions. According to the latest figures, almost 31,000 NHS workers have now received refunds.
Which trusts have stopped processing refunds?
While ultimately HMRC sets the rules on reclaiming tax and national insurance, individual claims are dealt with by 150+ NHS hospital trusts across the UK. We've spoken to a number of them, based partly on reports we've had from NHS workers, and found:
- One trust – Guy's and St Thomas' NHS Foundation Trust – has temporarily stopped issuing refunds and is reclaiming a total of £20,000 paid to four workers. It said: "Agreements will be made with individuals regarding the repayment plan and timescales based on individual circumstances."
A spokesperson said the refunds made in error "were linked to HMRC guidance pre-July 2017", adding: "Further clarity was provided by HMRC following questions made by a number of NHS organisations, which established that the refunds should not have been made."
- Two more trusts – King's College Hospital NHS Foundation Trust and Oxford Health NHS Foundation Trust have paused refunds and are warning staff those already made could be taken back.
- A fourth trust, Barts Health NHS Trust, has never given any refunds. It says it decided in September based on HMRC guidance that it does not believe those taking part in the WAT scheme are eligible for refunds. A fifth, Cambridge University Hospitals NHS Foundation Trust, told us it has never issued any refunds and is still deciding what to do about the applications it has received.
- Three trusts – Frimley Health NHS Foundation Trust, Manchester University NHS Foundation Trust and West Hertfordshire Hospitals NHS Trust – told us they paused refunds earlier this year but have now resumed them following clarification from HMRC. The Manchester trust added that it doesn't intend to apply updated HMRC guidance retrospectively.
- Five trusts – Newcastle Upon Tyne Hospitals NHS Foundation Trust, Pennine Acute Hospitals NHS Trust, Pennine Care NHS Foundation Trust, University Hospitals Birmingham NHS Foundation Trust and University Hospitals of North Midlands NHS Trust – told us they continue to process claims.
Heart of England NHS Foundation Trust refused to answer unless we made a Freedom of Information request, while 10 trusts failed to respond: Imperial College Healthcare NHS Trust, Leeds Teaching Hospitals NHS Trust, Nottingham University Hospitals NHS Trust, Oxford University Hospitals NHS Foundation Trust, Royal Free London NHS Foundation Trust, Sheffield Teaching Hospitals NHS Foundation Trust, Southern Health NHS Foundation Trust, St George's University Hospitals NHS Foundation Trust, University Hospitals of Leicester NHS Trust and University Hospital Southampton NHS Foundation Trust.
It's not entirely clear. In response to our query a number of trusts referred to new guidance issued by HMRC relating to reclaims from NHS employees (and not from those moved onto a 'contract of training') in July this year.
HMRC declined to give us a copy of the guidance issued immediately prior to that, so we can't directly compare what changes have been made. But it insists there was no significant change in the July guidance.
Most trusts we spoke to which have paused applications didn't give a detailed explanation. But a letter from Guy's and St Thomas' NHS Foundation Trust to one worker who'd applied for a refund, seen by MSE, suggests the issue could be to do with continuity of employment benefits.
It says that the trust had been told by HMRC that employees who had a contract of employment, received an 'agenda for change' salary and retained 'agenda for change' employment benefits such as sickness, maternity and annual leave entitlement, should be classed as an employee during the training period and so would not be due a refund.
NHS workers 'left in limbo'
Steve Nowottny, news and features editor at MoneySavingExpert.com, said: "Clearly there's huge confusion at the moment over who exactly is due a refund, with NHS workers apparently at the mercy of their trust's interpretation of the rules.
"As a result, some who may have overpaid a significant amount in tax and national insurance have been left in limbo. Even worse, a few who apparently overpaid, then won a refund, will now be told the powers that be have changed their mind yet again and they'll have to repay £1,000s.
"It's vital that NHS trusts and HMRC get their act together and start applying the rules clearly and transparently, so those who are owed can get it sorted quickly. In the meantime, if you think you overpaid, don't be deterred from reclaiming – but don't count on a speedy response either."
What should I do if I think I'm owed a refund?
If you think you may be eligible for a refund, our NHS tax reclaim guide has information on how to apply – in the first instance, contact your NHS trust. Before you do, though, it's important to understand that reclaiming could affect your state pension and tax credits – see our Reclaim warning for more info.
If your trust refuses your claim, you can also apply directly to HMRC. You can call its tax helpline on 0300 200 3300, while queries about NI can be made on a different specialist helpline, 0300 200 3500.
If I've already been given a refund, can it be taken back?
We've only heard of one trust so far which is actually attempting to reclaim refunds. Unfortunately whenever you're given a tax refund in error, it's possible it could be reclaimed. But you may be able to challenge any such decision.
If you're told you were paid a refund in error and disagree with the decision, here's what to try:
- Use your trust's grievance policy to ask it to investigate how this happened and whether you should pay anything back.
- If this doesn't work, you may be able to go to an employment tribunal – even if you're no longer employed by the trust. At this point you may wish to seek legal advice, or at the very least contact Citizens Advice. You will usually have three months to begin this process – see the Government's employment tribunal info.
You will also need to contact the Advisory, Conciliation and Arbitration Service (Acas) and tell it you intend to go to tribunal. It will then offer you a reconciliation service to try to avoid going all the way to tribunal.
It may also be worth speaking to HMRC directly about your case.
If you do receive a letter from your NHS trust saying it is looking at reclaiming cash, please let us know by emailing email@example.com.
What does HMRC say?
HMRC said it has not told trusts to pause applications for refunds, and is not expecting any trust to apply its updated July guidance retrospectively to reclaim any payments already made. It also says there was no significant change in the July guidance.
A spokesperson said: "We issued further guidance this year in response to feedback from trusts that more detail was needed about what constitutes scholarship income. The rest of the guidance remains the same."