What is Tax for Agency Nurses?

Tax is the deductions taken from a person's earnings, such as income from employment, or rental income from properties. This money is used to fund public services such as education and healthcare (the NHS).


How do Agency Nurses pay tax?

Tax on income earned through employment can be done in a number of ways. If you Pay As You Earn (PAYE), your tax will be deducted from the money paid to you by your employer. In the case of agency nurses on PAYE, your employer is your chosen recruitment agency. Agency nurses who choose to be “self-employed” must pay their own tax as part of their annual tax return. The tax year runs from April 6th to April 5th the following year.


Tax Allowances for Agency Nurses

Individual income of up to £12,570 is not subject to tax, so you will not need to pay tax on earnings below that threshold. This is known as your Personal Allowance. Individuals earning over £100,000 per year are subject to different tax legislation -  Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. Your allowance is zero if your income is £125,140 or above.


In the UK, a “Marriage Allowance” allows people to transfer up to £1,260 of their Personal Allowance to the person they are married to, in turn reducing taxes by up to £252 per tax year. 


Tax Relief for Agency Nurses

Agency nurses working through a Limited Company or Umbrella Company may claim some tax relief, including for subscriptions to the likes of the NMC and RCN, along with the cost of uniform. If in doubt, we recommend speaking with your accountant. 


Tax Forms

There are a number of tax forms relevant to agency nurses. The P60 form shows the tax you've paid on your salary in the tax year, and is available for current employees of a business. Agency nurses will usually receive their P60 from their recruitment agency. These are required for submitting a tax return, applying for tax credits or claiming a tax rebate. You will receive a P45 form when you finish working with a particular employer, to show how much tax you’ve paid. The form is in 4 parts, 1 of which is sent directly to HMRC from your previous employer, 1 part which you keep, and 2 parts which are given to your next employer. 


If you’d like to know more about the tax implications of being an agency nurse, or have any questions, please don’t hesitate to get in touch with a member of our team today.

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