Calculate Your Real NHS Pay in Seconds

NHS pension contributions receive automatic income tax relief through the "net pay arrangement" — your contribution is deducted from your gross salary before income tax is calculated. This means every £100 you pay into the NHS Pension Scheme actually costs you £80 as a basic rate taxpayer, £60 at the higher rate, or £55 at the additional rate.

Here is how the net pay arrangement works in practice. If your gross salary is £35,000 and you contribute 8.3% (£2,905) to the NHS pension, your taxable income drops to £32,095. Income tax is then calculated on the reduced amount, saving you 20% × £2,905 = £581 in tax automatically — no need to claim relief through HMRC.

This is different from "relief at source" used by some private pensions. Net pay arrangement means higher rate taxpayers get full tax relief without filing a Self Assessment return. NHS Money Purchase Additional Voluntary Contributions (MPAVCs) work differently and may require claiming via your tax return.

Plan 2 and Plan 5 are both UK income-contingent student loans repaid at 9% of salary above a threshold, but they apply to different cohorts of graduates and have different repayment thresholds and write-off periods. Plan 2 covers students who started courses between September 2012 and July 2023 in England or Wales, while Plan 5 applies to anyone starting an English undergraduate course from August 2023 onwards.

Key differences for the 2026/27 tax year:

A Band 5 nurse earning £32,073 on Plan 5 repays roughly £52 per month (9% of £7,073 above threshold), versus around £20 per month on Plan 2 (9% of £2,688 above threshold). Plan 5 borrowers will repay more over their working life because of the lower threshold and longer write-off period.

Overtime pay is not included in NHS pension calculations for most Agenda for Change staff — it is paid as taxable income but does not count as pensionable pay under the 2015 NHS Pension Scheme. This means working extra hours boosts your take-home pay but does not increase your future NHS pension benefits or change your contribution tier.

NHS pensionable pay typically includes basic salary, High Cost Area Supplements (HCAS), recruitment and retention premiums, on-call availability supplements, and acting up payments. Items that are not pensionable include overtime payments above contracted hours, expense reimbursements, one-off non-consolidated bonuses, car allowances, and most unsocial hours enhancements paid above standard rates.

There is one important exception: for part-time staff, additional hours worked up to full-time equivalent (37.5 hours per week) are pensionable. Only hours worked above the standard full-time week count as non-pensionable overtime. Medical and dental staff have separate pensionable pay rules under their own terms and conditions, where some additional duties may count.

The 2026/27 Agenda for Change pay award of 3.3% will not push most NHS staff into a higher pension contribution tier, because the tier thresholds rose by 3.8% (in line with September 2025 CPI inflation) — a larger increase than the pay award itself. This protection mechanism was specifically designed to prevent staff losing take-home pay through "tier creep."

For 2026/27, the NHS pension tier thresholds in England and Wales increased as follows:

• Tier 2 ceiling: £27,288 → £28,854 (up 5.7%)
• Tier 3 ceiling: £33,247 → £35,155 (up 5.7%)
• Tier 4 ceiling: £49,913 → £52,778 (up 5.7%)
• Tier 5 ceiling: £63,994 → £67,668 (up 5.7%)

Staff at risk of tier crossover are those within 0.5% of a threshold before the pay rise, particularly Band 5 nurses near the top of the pay scale and Band 7 staff approaching the 10.7% tier. If you cross a tier boundary, the higher rate applies to your entire pensionable salary, not just the portion above the threshold — which can wipe out gains from the pay rise. Always check your specific salary against the 2026/27 tier table after each pay award.