How locums are taxed
Locum doctors, pharmacists, dentists, optometrists and vets share one problem: the same person can be an employee on Monday, self-employed on Tuesday and working through a company by Friday. Tax is worked out separately for each engagement, so the first job is to know which route each piece of work falls under.
- PAYE. Full-time and part-time NHS appointments are generally employments taxed through payroll. Where an agency places a doctor to work personally in a hospital, nursing home or GP surgery, HMRC normally expects the doctor to be under someone's supervision or control, so the agency must operate PAYE and deduct Class 1 National Insurance.
- Self-employed. You invoice the practice or pharmacy directly, nobody deducts tax, and you settle up through Self Assessment. This is the usual model for freelance GP locums.
- Limited company. Your company invoices the client and you take salary and dividends. The off-payroll working rules (IR35) decide whether that saves anything.
There is no automatic answer for any profession. HMRC's guidance on locum doctors says a locum should not be assumed to have the same status as the doctor they replace, and its separate guidance for locum pharmacists was withdrawn from 30 June 2023. Status turns on the facts, and HMRC's Check Employment Status for Tax (CEST) tool is the starting point. This page is part of our medical accountants hub.
Worked example: a self-employed locum GP
A freelance GP locum in England makes a profit of £80,000 in 2026/27, their first year of self-employment, with no other income. The figures ignore pension contributions and student loans. Scotland has different Income Tax bands.
- Income Tax: £37,700 at 20% is £7,540, plus £29,730 (the profit above £50,270) at 40% is £11,892. Total £19,432.
- Class 4 National Insurance: £37,700 at 6% is £2,262, plus £29,730 at 2% is £594.60. Total £2,856.60.
- Total bill for 2026/27: £22,288.60.
The shock comes on 31 January 2028. Because the bill is over £1,000 and none of it was taxed at source, HMRC also asks for the first payment on account towards 2027/28, which is half of last year's bill. That makes £22,288.60 plus £11,144.30, so £33,432.90 due in one go, with a further £11,144.30 on 31 July 2028. Put money aside from your first invoice. Our guide to payments on account explains how they work, and the locum doctor tax guide goes deeper on GP and hospital work.
IR35 and working through a limited company
The off-payroll working rules apply when you provide services through your own company and would have been an employee if you had contracted directly. They work contract by contract, so some engagements can be inside and others outside.
- NHS trusts and other public sector clients decide your status and should give you a status determination statement with their reasons. If you are inside, the deemed employer deducts Income Tax and employee National Insurance before paying your company.
- Medium and large private clients, such as hospital groups and pharmacy chains, also decide.
- Small private clients, which includes many independent practices and pharmacies, leave the decision to your own company, and the risk sits with you.
A company can reduce tax only on engagements genuinely outside IR35, and even then the gain is modest once profits are paid out as dividends taxed at 10.75% and 35.75% in 2026/27. It also has a pension cost for GPs: freelance GP locums cannot pension income earned as a limited company. Try our IR35 quick assessment, then have each contract reviewed.
NHS pension for locum GPs
Freelance GP locums can pay into the NHS Pension Scheme on surgery work, deputising or temporary, and on appraisal work, using the GP locum Form A and Form B (submitted through PCSE Online in England). The 2026/27 rules are specific:
- Pensionable income is exactly 90% of your fee, excluding the employer contribution element.
- The employer contribution is 14.38% of pensionable pay, including a 0.08% levy. On a £500 session fee, pensionable pay is £450 and the employer contribution is £64.71.
- You pay both employee and employer contributions by the seventh day of the following month.
- Work that ended more than 10 weeks before the form is received cannot be pensioned.
- Income earned as a limited company, through an agency, or as a GP provider in your own surgery cannot be pensioned this way. Out of hours and ICB work goes through the Solo process instead.
The annual allowance for 2026/27 is £60,000, measured on the growth in your defined benefit pension, and it is tapered where threshold income is over £200,000 and adjusted income is over £260,000. See NHS pension annual allowance explained.
VAT for locums
Medical care provided by professionals on a statutory register is exempt from VAT when it is within their registered profession and its main purpose is protecting, maintaining or restoring health. That list covers doctors, dentists, pharmacists, optometrists, nurses and the professions registered with the Health and Care Professions Council. Veterinary surgeons are not on it, so a locum vet's fees count towards the £90,000 VAT registration threshold.
How you are supplied matters too. HMRC generally treats supplying health professional staff as taxable. In July 2026, HMRC changed its position for doctors: supplies of GMC-registered locum doctors may be exempt as the provision of a deputy, including when an employment business supplies them. The change does not extend to other healthcare professionals, and a medical report written solely so a third party can make an insurance or legal decision is standard-rated. If you work through a company or agency, your accountant should check the VAT position of each arrangement.
Expenses locums can claim
For self-employed locum work, costs incurred wholly for the business are deductible:
| Expense | How it is treated |
|---|---|
| Registration fees (GMC, GPhC, GDC, HCPC) | Allowable |
| Indemnity (for example MDU or MPS) | Allowable |
| BMA and other professional memberships | Allowable if related to your work |
| Travel | A genuinely itinerant locum based at home can usually claim travel between home and a series of temporary sites. Cars: 55p a mile for the first 10,000 business miles in 2026/27, then 25p. Travel between home and a regular place of work is not allowable |
| Courses and CPD | Allowable if they improve or update skills you use, or develop new skills related to your work |
| Equipment, phone and software | Allowable for the business share |
| Accountancy fees | Allowable for business accounts, but not the cost of preparing your personal Self Assessment return |
On PAYE work, you can still claim tax relief on approved professional fees and subscriptions. Registration with the GMC, GPhC, GDC or HCPC and cover from the MDU or MPS are on HMRC's approved list, and relief on a BMA subscription is limited to 85%.
Making Tax Digital for locums
If your self-employment and property income before expenses was over £50,000 in 2024/25, you should have been using Making Tax Digital for Income Tax since 6 April 2026. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. PAYE shifts and dividends from your own company do not count towards it. Quarterly updates are due by 7 August, 7 November, 7 February and 7 May, and HMRC will not give penalty points for late quarterly updates during 2026/27, though late tax returns still attract them. For locum pharmacists, see the locum pharmacist tax guide.
Key dates for 2026/27
| Date | What is due |
|---|---|
| 31 July 2026 | Second payment on account for 2025/26 |
| 7 August 2026 | First MTD quarterly update, if you are in MTD |
| 5 October 2026 | Register for Self Assessment if you started locum work as self-employed in 2025/26 |
| 31 January 2027 | 2025/26 online return, balancing payment and first payment on account for 2026/27 |
| 6 April 2027 | MTD starts for qualifying income over £30,000 in 2025/26 |
| 31 July 2027 | Second payment on account for 2026/27 |
| 31 January 2028 | 2026/27 return and balancing payment |
How GoForma helps locums
GoForma is a UK online accountancy practice based in London, working with clients across the UK by phone, video, email and WhatsApp. Our accountants are ACCA and AAT qualified, and FreeAgent accounting software (worth £360 a year) comes with every package, so you can raise invoices and track what you owe.
- Self-employed locums: Start Sole Trader at £44 a month, 50% off for the first 3 months, with a dedicated personal accountant and your Self Assessment return. Start Sole Trader + MTD at £68 adds quarterly submissions.
- Locums with a company: Start Bundle at £88 a month, 50% off for the first 3 months, includes year-end accounts, the CT600, payroll for one director and an IR35 review on every contract.
- Just the return: a one-off Self Assessment tax return for £198.
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