New pay scales for NHS consultants in 2024 – are they all good news?

In March 2024, the Department of Health and Social Care (DHSC) announced a new pay offer for NHS consultants in England. The offer, which was accepted by the British Medical Association (BMA) after a ballot of its members, includes a minimum 6% pay rise for 2023-24, a new pay progression system, changes to the clinical excellence awards scheme and changes to the Review Body on Doctors’ and Dentists’ Remuneration. The new pay scales came into effect from January 2024 and apply to all NHS consultants, regardless of their contract type or specialty.

You can download a copy of the new pay scales for NHS consultants by clicking on this link. The diagram shows the current pay figures under the previous pay scales and the uplifts applied.

Funding for local clinical excellence awards (LCEA) has been redeployed into remuneration and the contractual entitlement to access an annual awards round has ceased. Existing LCEAs remain, and any awarded prior to the original reform in 2018 remain pensionable and consolidated, although the value of these awards will be frozen.

Naturally, it’s the assumption that an increase in pay can only be a good thing, and whilst this is generally true, an increase in pay can come with some unwanted tax burdens. The below example shows the difference in take-home pay for someone on the eighth pay scale.

From a gross pay rise of £13,494, the net income retained by the individual is just £6,797 and this is without factoring in any annual allowance tax charges which may arise.

The annual allowance tax charge has become less punitive in recent years. This is due to the increased annual allowance from £40,000 to £60,000 and the thresholds at which tapering of this allowance commences having also increased.

In the example above, where the individual’s gross pay increases by £13,494, there’s still potential for an annual allowance tax charge to occur. The pension input amount within the 2015 scheme from just the gross pay in the year would be just over £35,000, and there would also be uplifts applied to the existing pot which would increase this further.

Furthermore, if the individual was a member of a legacy scheme (1995/2008 section), these both continue to have a final salary link, which can generate additional growth. If the individual was a member of the 1995 section, with 15 years of service, they would have a pension input amount in the 1995 section of just under £23,000. Therefore, the combined pension input amount would be roughly £58,000, excluding the impact of uplifts to the existing 2015 scheme pension entitlement. This is also without factoring in any other pensionable income or the impact of tapering of the allowance if threshold income exceeds £200,000.

Any unused annual allowances from the previous three years would be available to be offset against any excess and scheme pay elections are available should a tax charge arise. However, if an annual allowance tax charge did arise, and was paid for personally, it’s possible that the increase in net income may be negligible, or even end up reducing take-home pay in the first year of the increase.

Generally, the pay review will be good news for the majority of NHS consultants, however, there will undoubtedly be some who benefit from the changes more than others. If you’re impacted by a significant pay increase, such as between pay points 7 & 8 and 13 & 14, it’s possible that you could end up being negatively affected initially.

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For further information, please get in touch with your usual contact at Larking Gowen. You can find contact details on the Our People section of the website, or call 0330 024 0888 or email enquiry@larking-gowen.co.uk.

George Crowe