NHS Scotland Distant Islands Allowance Explained

If you work for the NHS on Shetland, Orkney or in the Western Isles, your payslip includes something colleagues on the Scottish mainland don't get: the Scottish Distant Islands Allowance. It's a genuine, published national payment rather than a local top-up some boards choose to offer and others don't — but it's also easy to misunderstand, since it's a flat cash figure rather than a percentage, it doesn't cover every remote part of Scotland, and it's easily confused with the separate Recruitment and Retention Premium mechanism. This page sets out exactly what it's worth, who qualifies, and how it actually works.

What the allowance actually is

The Scottish Distant Islands Allowance (DIA) is a long-standing arrangement — versions of it have existed in NHS Scotland pay circulars for decades — designed to recognise the genuinely higher cost of living and the practical difficulty of travel to and from the Scottish mainland for staff based on the most remote island groups. It's paid as a flat annual sum added to salary, not as a percentage uplift the way High Cost Area Supplement works for staff around London, and not as a discretionary local decision the way a Recruitment and Retention Premium is. Scottish Government guidance describes it explicitly as a genuine incentive: extra money intended to help make it realistic for NHS boards to recruit and retain staff in communities where the cost and inconvenience of living remotely might otherwise put people off.

2025/26 and 2026/27 rates in full

Rates are confirmed by Scottish Government circular — most recently PCS(SDIA)2025/1, issued 12 June 2025, which set out both the 2025/26 and 2026/27 figures at once:

Both years' rates reflect the same headline uplifts as the rest of NHS Scotland's current pay deal — 4.25% for 2025/26 and 3.75% for 2026/27 — and the circular confirms they're subject to the same CPI "inflation guarantee" mechanism set out in PCS(AfC)2025/5, so a further adjustment isn't ruled out if inflation over the relevant period runs ahead of the assumptions behind these figures. For the full mechanics of that inflation guarantee and Scotland's wider pay deal, see our NHS Scotland pay scales guide.

Which health boards and areas actually qualify

Eligibility is defined by the specific island a post is based on, not simply by which of Scotland's 14 territorial health boards employs you:

• • NHS Shetland — the highest of the three tiers, reflecting Shetland's distance from the mainland.
• • NHS Orkney — the middle tier.
• • NHS Western Isles (Na h-Eileanan Siar) — the lowest of the three tiers.
• • Tiree, Jura, Islay, Coll and Colonsay — a group of Inner Hebridean islands that sit within NHS Highland's area, paid at the same lowest tier as the Western Isles despite being a different health board entirely.

How it's paid — and what it isn't

A few features of how the allowance actually works are worth being precise about, since they trip people up:

• It's taxable but non-pensionable. The allowance is paid through payroll alongside normal salary and wages and is subject to Income Tax and National Insurance in the usual way, but it does not count as pensionable pay for NHS Pension Scheme purposes.
• It continues during sick leave. Because it's tied to your post rather than hours actively worked, it remains payable during periods of sick leave.
• It isn't used to calculate other enhancements. The circular is explicit that the allowance itself isn't taken into account when working out overtime or other pay enhancements — those are still calculated from your basic Agenda for Change salary alone.
• It's a flat sum, not a percentage. Unlike HCAS, the amount doesn't scale with your band or salary — a Band 3 healthcare assistant and an Executive Director based in the same location receive the same cash figure.

Why the rate isn't the same everywhere

The three-tier structure broadly reflects genuine differences in remoteness and the practical cost and difficulty of travel to the Scottish mainland — Shetland is the most remote of the three areas and carries the highest rate, Orkney sits in the middle, and the Western Isles and the named Inner Hebridean islands, while still genuinely remote, are the lowest of the three tiers. This isn't a mechanism unique to the NHS — equivalent distant islands allowances exist elsewhere in Scottish public sector employment for these same areas — but the specific figures and circular referenced on this page apply to NHS Scotland staff.

The 2025 funding shortfall, explained

In April 2025, NHS Shetland was confirmed to be receiving an extra £1.3 million a year from the Scottish Government specifically to address a historic shortfall in how the Distant Islands Allowance had been funded at board level. It's worth being precise about what this was: it was additional funding to NHS Shetland's own budget to properly cover the cost of paying the allowance to everyone actually entitled to it, rather than a separate increase to the per-person rate shown in the table above. In other words, it addressed a gap in how the allowance had been financed at board level, not a change to what an individual member of staff is actually paid.

Why you can rely on the figures on this page

• ✓ Every rate on this page is taken directly from NHS Circular PCS(SDIA)2025/1, the official Scottish Government pay circular covering both the 2025/26 and 2026/27 years
• ✓ We've been explicit about which specific islands qualify — including the less obvious Inner Hebridean islands tier — rather than implying the allowance covers the whole of remote Scotland
• ✓ We've clearly distinguished this allowance from the separate Recruitment and Retention Premium mechanism and from the situation on the Highland mainland, rather than conflating three different things
• ✓ This page is dated and will be updated if a further inflation-guarantee top-up or new circular changes these figures