NHS tax reclaim
Many overpaid tax and NI – can you get £1,000s back?
We've been contacted by scores of current and former NHS workers who are trying to reclaim income tax and national insurance (NI) they paid while training at some point since 1999.
MoneySavingExpert.com believes 10,000s of NHS staff may have overpaid tax or NI while taking part in the 'Widening Access Training' scheme. According to the latest figures, almost 31,000 people have already been refunded, and others may still be owed £1,000s – £18,700 is now the biggest refund we've heard of. Here's how to check if you may be eligible and how to reclaim.
A word of warning – in some circumstances doing this could affect your state pension or tax credit entitlements. See full info below.
In this guide...
This is a complex area with little clear guidance. Please give us feedback, suggest improvements and let us know how you've got on in the NHS tax reclaim forum thread.
While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice. If you act on it, you acknowledge that you do so at your own risk.
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How do I know if I can reclaim?
Nurses, midwives, health visitors, doctors and paramedics are among those who took part in Widening Access Training (WAT), a specific scheme designed to broaden the professional knowledge of NHS workers. WAT has been running since 1999 – if you've been on it at any point since it started it's worth reading on.
The scheme sees NHS workers undertake full-time training at colleges and universities. But the problem is that payments they got while training were taxed as if this was paid work. As they were on a special training scheme which offered some tax and NI exemption, some should never have paid it.
Whether or not you can reclaim – and how much you may be able to get back – depends on your situation at the time you were training:
- Were you in employment at the time? If you were technically an NHS employee while training, there's a specific set of criteria determining your eligibility. See reclaiming rules for NHS employees who were in training.
- Were you on an NHS 'contract of training'? Some NHS workers had their employment suspended while taking part in training and were put on what's technically known as a 'contract of training'. If you didn't pay into an NHS pension while training, you may have been on one of these, rather than being an employee. See reclaiming rules for those on NHS 'contracts of training'.
While there's a lot of confusion around this complex topic, some of those who've persevered have reported serious success. Since launching this guide we've had dozens come in, including one paramedic who reported reclaiming a huge sum:
I trained as a paramedic with the North East Ambulance Service way back in 2007 on a two-year course. Following your NHS tax reclaim help, I have recently received in total £18,700 including tax and NI contributions. Well worth the wait.
We also heard from Julie, who initially struggled to reclaim but was ultimately successful after being spurred on by this guide:
For the past six months I've been trying to claim tax and NI owed to me as a Widening Access Training participant. Firstly the NHS dragged this matter out for three months by not giving HMRC the information it required, and then once HMRC received the info it didn't get in touch to update me.
After reading your email last week I sent a further letter to HMRC asking for them to sort this out. Fantastic news – within four days they wrote back saying they would send me a cheque for £2,680 for national insurance I'm owed. They said they are looking into tax due to me and will inform me separately of this.
I am sure that highlighting this issue in the weekly email has spurred HMRC on to deal with this matter – so thank you everyone at MSE.
One psychologist, who asked not to be named, told us he reclaimed an astonishing £13,500 in tax and NI for clinical training between 2012 and 2015 – and could still be in line to receive even more (though the future of psychologists' payments is now in doubt):
I'm waiting for the final six months' worth of rebate for my training. It takes a long time and much hassle to get money back. The HMRC Widening Access team is small and is pretty swamped, and NHS trusts now either don't exist or don't know the process for helping individuals to get a rebate.
If you were an NHS employee when you took part in the Widening Access Training scheme, whether you're eligible to reclaim tax and NI depends on a number of factors:
- The type and length of course. You must have been enrolled full-time on a course for at least one academic year (which runs from 1 September – 31 August).
- Attendance. You must have attended for at least 20 weeks in an academic year.
- Your course must have been run by a recognised educational establishment. That's a college or university open to the public.
- The payments you received for the course must have been only for studying or training, not working. This is the big one – the exemption only applies to income paid to sustain you while you trained – which HMRC technically considers a 'scholarship', even if you may have thought of it as earnings. So if you were on a full-time WAT scheme but also worked part-time elsewhere, your earnings elsewhere aren't exempt.
- Your income can affect your eligibility. The rules indicate if you earned over a certain threshold (currently £15,480, though it's varied – see the table below) HMRC may look at your claim in more detail to make sure your income was a scholarship according to its Employment Income Manual.
|1 Sep 2007 – Present||£15,480||£15,480|
|1 Sep 2005 – 31 Aug 2007||£15,000||£15,000|
|1999 – 31 Aug 2005||£7,000||No exemption|
We asked HMRC for a full explanation of whether those who earn over the threshold can still claim tax or NI refunds.
- On tax refunds, it said it "may choose to enquire further about the arrangements" of the course – ie, it has discretion over individual tax claims. The key thing it says is that "for tax purposes HMRC will need to be satisfied that payments can all be reasonably described as a training or scholarship allowance. If so, the full amount of the payment is exempted from charge."
- For NI refunds, it appears the rules are much stricter and more clear-cut. HMRC told us "no refund ... will be due" if you're paid above the threshold.
If you fulfilled all the criteria above, and you paid tax and NI on your training income, you may be entitled to claim it back.
Warning! Psychologists may no longer be able to claim. In March 2017 HMRC suspended payouts and said it would consider each application on a case-by-case basis. See our news story for more info.
If you stopped being an employee when you did your Widening Access Training, and were instead put on an NHS 'contract of training', then in most cases you DON'T need to pay any tax or NI on your income from that contract, according to this guidance from HMRC. So if you did pay any, you can try to reclaim it.
The rules are looser for you than they are for employees, as there's no specific threshold over which tax and NI suddenly becomes payable. HMRC does state though that "each case needs to be considered on its own merits", and it will scrutinise the terms of your contract when making a decision, so a refund or exemption isn't guaranteed.
While we've set out the general rules above, it's worth noting that much depends on how they are implemented by NHS trusts – and there now seems to be significant variation in what different trusts are doing.
In November 2017 we reported that a number of trusts have put tax refund claims on hold, while one trust is actually trying to take back £20,000 it's already paid out – see our Training tax refunds halted MSE News story for full info.
We'll continue to follow this story as it develops – if you're having trouble with a claim or have been told you may have to be repay a refund you've already been given, let us know at firstname.lastname@example.org.
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How to reclaim
If you think you're able to reclaim, here's what to try – but do make sure you've read our warning about the possible pitfalls beforehand.
Contact the NHS trust
Start with the payroll department of the NHS trust which paid you when you were on the Widening Access Training scheme. Some trusts have allocated members of support staff specifically to help with WAT claims.
First of all, double-check if you were an employee at the time or on a 'contract of training'. Then you need to tell 'em you want to reclaim – here's a template of the type of thing you can say.
- Tell the trust you participated in Widening Access Training, paid tax and NI during that training and believe you may be entitled to reclaim it under the special HMRC rules relating to training earnings.
- You may need to work with the trust to submit proof of that training, the type of contract you were on, and what you were paid at the time, to HMRC.
- If they won't play ball – some parts of the NHS seem simply not to have heard of this issue – show them this guide as a starting point.
Try speaking directly to HMRC
If the NHS trust can't help, HMRC told us that anyone with a query about a tax refund 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 you're trying to reclaim both, it says its advisers will work to resolve all queries in one call.
While the first port of call is always your NHS trust, the way your refund is handled will depend on when you studied – as HMRC's guidance explains.
If your course started before 6 April 2013, your NHS trust will need to submit the claim to HMRC on your behalf. If you're found to have overpaid tax or NI, you'll be refunded by HMRC – usually via a cheque in the post.
If your course started on or after 6 April 2013, your trust will be responsible for processing the claim and any refund you're due will be made through your trust's payroll system.
HMRC is keen to stress that there's definitely NO need to use a claims company to put your refund request in, as many of these firms charge fees. You can make your request for free via the methods outlined above.
Warning: Reclaiming could affect your state pension & tax credits
While reclaiming is free and could lead to you getting £100s or even £1,000s back, it's not without risk. In particular:
- You may have to repay tax credits. If you received tax credits while you were on the Widening Access Training scheme and successfully reclaim tax and NI, there's a small chance you may have to pay the tax credits back.
Most will be asked to pay back less than they receive in their tax/NI refund, but in extreme cases you could have to pay back more.
The following story shows the uncertainty around this:
Health visitor Julie from the north of England completed a diploma full-time between January 2014 and January 2015, and her trust paid her £24,000 during this time.
She applied to HMRC for a tax and NI refund in April 2015, after learning about the special rules from her union Unite. Fifteen months later, after involving her MP in the claim, she finally received an NI refund of £1,600, but is still waiting for a decision on tax.
However HMRC now says it's examining the working tax credits she was paid during the course, and she may have to pay them back if it finds she was "not technically employed" while training.
- You may lose national insurance years, which could affect your entitlement to the basic state pension. That's because you need either 30 or 35 'qualifying years' (depending on when your official retirement date is) to get the full state pension – and a qualifying year is one in which you were working and paid NI.
Most people work and pay NI for over 40 years in their lifetime, so this is unlikely to affect your overall entitlement, but it's certainly something to consider when deciding whether to make a claim.
HMRC told us it does warn people applying for refunds that it could affect their state pension entitlement, and gives them the chance to "offset" part of any refund they receive, to protect their state pension.
You can learn more about 'qualifying years' in our State Pensions Guide.
How big is the problem?
Neither the NHS nor HMRC has ever given us a figure for how many NHS workers are likely to be owed a tax or NI refund, but based on the number of refunds already processed we believe it could run into the 10,000s.
Confusingly, NHS workers with similar circumstances who underwent similar training appear to be getting very different decisions from HMRC.
We've heard of several people who apparently earned well in excess of the threshold and still managed to reclaim NI, despite the very strict threshold, while others on similar salaries have had their claims rejected. HMRC says each decision depends on the facts of the specific case.
There also seems to be variation in how NHS trusts are handling claims, with some now having paused refunds and one even trying to recoup money already paid out.
We'll be continuing to investigate this and try to get firm answers. Let us know how you get on by emailing email@example.com or in the NHS tax reclaim forum thread, and make sure you're signed up to the weekly email for updates as we learn more.