Are NHS pay rises backdated?

Because of the complex process behind how NHS and Agenda for Change pay rises are decided, often decisions on pay are not ready in time for the start of the new financial year in April. In 2024/25, a decision on pay was not made until July.

Additionally, once any pay increase has been decided by the Government on the advice of the NHS Pay Review Body, it may take several weeks for NHS finance teams to calculate changes in wages and implement the pay rises in monthly payslips.

All of this means that pay rises are often delayed in terms of NHS staff actually seeing more money in their wages.

However, the good news is that this doesn’t mean staff miss out on the money they might be owed. NHS pay rises are always backdated.

For example, if the first payslip reflecting a new pay rise is in June, that month would also include extra money to reflect what would be owed for April and May at the higher rate of pay.

It is worth considering that additional pension contributions are also backdated, reducing the total take home amount in the “catch up” month. In some rare instances (for example where pay rises have moved an individual into a higher pension contribution category) this can mean that the “catch up” month actual has a significant net decrease in take home pay.

Will I get back pay for the 2024/25 pay rise?

Yes. Staff will get back pay for every month between April and October, which is the first month the new pay deal will be seen in pay packets. Given the relatively generous rise of 5.5%, this could mean several hundred extra pounds in your pay packet. However, don’t forget that you will still be taxed and pay pension contributions for the additional pay as usual.

Will I be taxed more on the NHS pay rise?

No. The total amount of tax you pay on the back pay for the NHS pay rise in 2024 will not be any more than if you had been paid the added value each month between April and October in your normal pay packet. Likewise, your pension contributions will remain as they would have done if you had received your increased pay from April. You will not lose out in terms of tax or take-home income through receiving your pay as a lump sum.

Will NHS back pay affect my Universal Credit (UC)?

If you are receiving Universal Credit, the way that the NHS pay rise in 2024 is planned to be paid is likely to have a significant impact on your benefit payments. This is because Universal Credit is directly affected by how much money comes into your bank account each month.

Many NHS staff on Universal Credit will see some of their pay increases “cancelled out” by reductions in the Universal Credit they are eligible for.

Most importantly, the payment of backdated pay as a lump sum in October might tip some people into the category of “surplus earnings” under Universal Credit rules. This could effectively end their Universal Credit claim, until they have re-applied. If you are worried this might be applicable to you, you should speak to your local HR team as soon as possible. NHS organisations have committed to paying backdated pay spread across several months upon request – but you need to speak to your HR team for this to be applied, it will not happen automatically.