Tax for locum doctors

Locum work gives you flexibility, better rates and control over your diary — and a tax position that's more tangled than a salaried post ever was. Employment status, IR35, the NHS Pension, indemnity, the £100k trap: here's the whole picture, in plain English.

This guide is for locum doctors of every stripe — GP locums, hospital and A&E locums, out-of-hours and bank shifts, and consultants doing private or locum sessions alongside an NHS job. The first thing to pin down is how you're actually engaged, because that decides everything else.

Employed, self-employed, or through a company?

Locum doctors are usually paid in one of three ways, and each is taxed differently:

• Through an NHS staff bank or an agency payroll — normally treated as employed, with tax and National Insurance taken off through PAYE before you're paid. It lands on a P60.
• Directly, as a sole trader — you're self-employed, invoice for your sessions, and declare the income on a Self Assessment return, paying income tax and Class 4 National Insurance on your profit.
• Through your own limited company — a personal service company. This is where the off-payroll working (IR35) rules come in (see below).

Plenty of doctors mix these in a single year — a substantive or training post on PAYE, plus self-employed locum sessions on the side. It all belongs on one Self Assessment return, and the job is making sure income already taxed at source isn't taxed again, and your allowances land in the right place.

IR35 and the limited-company route

If you work through your own company, the off-payroll working rules ask a simple question with a complicated answer: if you stripped away the company, would this engagement look like employment? If yes, it's "inside IR35" and should be taxed much like a job.

Crucially, you often don't get to decide:

• NHS trusts and other public bodies have determined status themselves since April 2017. If they judge the role inside IR35, the body or agency paying your company (the "fee-payer") deducts income tax and National Insurance before the money reaches you.
• Medium and large private clients have done the same since April 2021.
• Small private clients only: your company still makes the call itself.

The upshot: for a lot of locum company work the tax is already taken at source, which changes whether a limited company is worth the cost and admin at all. It's a genuine "it depends" — and one we're glad to model for you before you set anything up.

How much tax will you actually pay?

As a self-employed locum you're taxed on your profit — fees in, less allowable costs. For 2026/27:

• The first £12,570 is tax-free (personal allowance).
• 20% income tax between £12,570 and £50,270.
• 40% between £50,270 and £125,140.
• 6% Class 4 National Insurance on profit from £12,570 to £50,270, then 2% above (Class 2 is treated as paid).

A worked example. Dr Patel works as a self-employed locum, bills £70,000 in fees, and after £8,000 of the costs below her profit is £62,000:

• Nothing on the first £12,570.
• 20% on the £37,700 up to £50,270 = £7,540.
• 40% on the remaining £11,730 = £4,692.
• Class 4 NI: 6% to £50,270 then 2% above ≈ £2,497.

That's roughly £14,700 in tax and National Insurance — before any NHS Pension contributions, which are separate (see below). Because so much of a locum's income sits in the higher-rate band, the deductions in the next section are genuinely worth chasing.

What you can claim — in detail

Self-employed locums carry real professional costs, and every genuine one comes off your income before tax. The big ones:

Medical indemnity and defence

Your medical defence or indemnity subscription — the MDU, MPS, MDDUS or a commercial provider — is one of the largest costs a locum bears, and it's fully allowable when it's for your professional work.

Registration and professional bodies

GMC registration and licence fees, BMA membership, Royal College subscriptions, and the costs of revalidation and annual appraisal are all deductible — these are recognised professional bodies for tax purposes.

Training, exams and CPD

Courses, conferences and exams that maintain or update the skills you already use, along with medical journals, textbooks and CPD subscriptions. (Training to move into a genuinely new specialty is treated differently — ask us if that's your situation.)

Equipment

Your stethoscope, otoscope, bag, loupes, a laptop for notes and dictation — medical and office equipment is plant and machinery, so the cost is usually claimed in full in the year of purchase through the Annual Investment Allowance (a 100% deduction).

Travel between workplaces

Travelling between different sites and to genuinely temporary placements is claimable — 55p per mile for the first 10,000 miles and 25p after (rates from 6 April 2026), or actual costs. Ordinary daily commuting to a single, regular workplace isn't — the line matters, and we'll help you draw it correctly.

The running costs

Agency and platform fees, DBS checks, a share of your home admin and phone costs, professional insurance, and your accountancy fees (yes — our fee is itself deductible).

The NHS Pension as a locum

One of the biggest advantages of locum work is that you can often stay in the NHS Pension Scheme — but as a self-employed GP locum you have to set it up yourself, and it runs alongside your tax rather than through it.

• Complete a GP Locum Form A for each piece of pensionable work, and have the practice certify it.
• At the end of each month, complete a Form B summarising the work paid that month and the contributions due.
• You pay both the employee and the employer contributions (at the applicable tier) to PCSE — by the 7th of the following month.

VAT and medical work

Good news for most locums: clinical work is exempt from VAT, because its main purpose is the protection, maintenance or restoration of a patient's health. That means no VAT to charge and, for purely clinical income, nothing to register for.

The exception is non-clinical work — medico-legal reports, expert-witness work and similar, where the main purpose isn't the patient's own health. That income is standard-rated, and if it climbs above the £90,000 VAT threshold you may need to register for VAT on those supplies. If you do a meaningful amount of report work, flag it and we'll keep an eye on the line.

How to file, step by step

• 1. Register with HMRC for Self Assessment by 5 October after the tax year you started your self-employed locum work. You'll get a UTR. Here's how →
• 2. Keep records — invoices for every session, your PAYE P60s/P45s, and receipts for indemnity, subscriptions, travel and equipment. Keep your Locum A/B pension paperwork with them.
• 3. File your return online by 31 January (or on paper by 31 October), bringing together your employed and self-employed income. The dates that matter →
• 4. Pay what you owe by 31 January.

Making Tax Digital

Making Tax Digital is already here: since 6 April 2026 it applies if your gross self-employment and property income — your turnover, before expenses — was over £50,000. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028. It means keeping digital records and sending HMRC a short update every quarter — 7 August, 7 November, 7 February and 7 May — on top of your year-end return. We'll keep the records and file them so you can concentrate on the medicine.

Common questions

Am I employed or self-employed as a locum? Bank and agency-payroll work is usually employed (PAYE); invoicing directly as a sole trader is self-employed; a limited company brings in IR35. Many locums are a mix.

Is my indemnity subscription tax-deductible? Yes — medical defence or indemnity cover for your professional work is an allowable expense, as are your GMC, BMA and Royal College fees.

Can I still be in the NHS Pension? As a GP locum, yes — via the Locum A and B forms, paying both employee and employer contributions to PCSE, with a 10-week deadline to submit.

Do I charge VAT? Not on clinical work (it's exempt). Medico-legal and expert-witness work is standard-rated and can, in volume, take you over the £90,000 threshold.

Related guides

• Do I need to file a tax return?
• How to register for Self Assessment
• What expenses can I claim?
• How much tax will I pay?
• Payments on account, explained

This guide is general information, not personal tax advice. Figures are for the 2026/27 tax year and can change at each Budget — always confirm the current numbers on GOV.UK or ask us to check your situation.