Do I pay tax and National Insurance on standby or on-call payments?

Full answer

Many employees -- particularly in healthcare, IT support, engineering, utilities and emergency services -- receive extra pay for being on standby or on-call outside their normal working hours, ready to be called in if needed. HMRC does not treat this pay any differently from ordinary salary for tax purposes. **Tax and NI treatment** Standby allowances, on-call payments, and callout fees are all classed as earnings from employment. They are added to your gross pay for the relevant pay period and taxed through PAYE in exactly the same way as your basic salary or overtime: Income Tax at your marginal rate (20% basic, 40% higher, 45% additional for 2026/27) and Class 1 employee National Insurance at 8% on earnings between the primary threshold (£12,570) and the upper earnings limit (£50,270), and 2% above that. Your employer also pays Class 1 secondary (employer) NI on the payment. **No special exemption** Unlike certain specific reimbursed expenses (for example some travel or subsistence costs paid under strict HMRC rules), there is no general tax exemption for standby or on-call pay simply because it compensates you for being available rather than actively working. Even if the payment is described as an "allowance" rather than "pay," HMRC looks at the substance of the payment, not the label used on the payslip. **Effect on your pay for the month** Because standby and on-call payments are added to your normal pay for that period, they can push a particular month's income into a higher tax band even if your overall annual salary would not normally reach that band. PAYE is calculated (broadly) as if your pay for that period were repeated all year, so an unusually large standby payment in one month can result in more tax being withheld than is ultimately due for the year as a whole; this typically self-corrects through the rest of the tax year, or you can reclaim any overpayment after the year ends via a P800 review. **Impact on pension contributions** If your pension contributions (whether under auto-enrolment or a more generous scheme) are calculated as a percentage of gross pay, standby and on-call payments that form part of your regular contractual pay will normally also increase your pensionable pay for that period, and therefore your pension contribution, though this depends on how your specific scheme defines pensionable earnings -- check your contract or ask your payroll team if unsure. **Worked example** A hospital nurse earning £32,000 a year receives a £150 on-call payment for covering a weekend shift on standby. That £150 is added to her normal monthly pay and taxed at her marginal rate: as a basic-rate taxpayer for that portion, she pays 20% Income Tax (£30) and 8% employee NI (£12), keeping £108 of the £150 payment. There is no separate, more favourable tax treatment simply because the payment relates to being on standby rather than actively working.

Try the calculator