Accounting for Locum Doctors UK: Tax, Expenses and NHS Pension

Tax for locum doctors in the UK depends on how each shift is paid: through PAYE, as self-employed, or through your own company. That choice also decides which work counts for the NHS Pension Scheme and which expenses you can claim.

Most locum doctors have more than one of these going at once: a training post or salaried role on PAYE, bank shifts at a trust, and agency or practice sessions on top.

This guide explains tax for locum doctors in the UK: how each type of locum income is taxed, what you can claim, and how locum work fits with your NHS pension.

The NHS Pension Scheme covered here is the one for England and Wales, and the GP locum forms are the process in England. Scotland and Northern Ireland run their own schemes, and Scottish taxpayers pay Scottish Income Tax rates.

How Does Tax for Locum Doctors in the UK Work?

There is no special locum tax. What matters is the route each payment takes, because that decides who deducts the tax and what you can set against it.

• Trust staff bank shifts: you are the trust’s employee for that work. Tax and National Insurance come off through PAYE, often on a separate payslip.
• Self-employed locum work: GP practice sessions and other direct engagements are paid gross against your invoice. You declare the profit on your Self Assessment return.
• Your own limited company: the company invoices, pays Corporation Tax on its profit, and pays you a salary and dividends.
• Agency shifts: depending on the agency and your status, you may be paid through its payroll, an umbrella company or your own company.

Do Locum Doctors Need to File a Self Assessment Return?

Usually, yes. Self-employed income over £1,000 has to go on a Self Assessment return, and the online return is due by 31 January after the tax year ends.

If you also hold a PAYE post, your tax code normally gives your whole personal allowance to that job. Your locum profit is then taxed at your top rate, often 40%, with nothing taken off when you are paid.

Why Do New Locums Get a Large First Tax Bill?

Because of payments on account. Once your Self Assessment bill is over £1,000, HMRC usually asks for two advance payments towards the next year, each half of this year’s bill, due on 31 January and 31 July.

Illustrative example: a doctor whose first locum year leaves £6,000 to pay through Self Assessment would usually owe £9,000 on 31 January (the £6,000 plus a £3,000 first payment on account) and another £3,000 on 31 July.

Move a fixed share of every locum payment into a separate savings account from your first shift.

Does IR35 Apply to Locum Doctors?

It can, if you work through your own company. NHS trusts are public sector bodies, so the trust decides your status for each engagement, not you, and it should give you a status determination statement.

If an engagement is inside IR35, whoever pays your company deducts tax and National Insurance as if you were employed. For that work, most of the tax advantage of having a company disappears.

Our contractor and IR35 guide explains the status tests in more detail.

Should a Locum Doctor Use a Limited Company?

Sometimes, but less often than doctors expect. A company only saves tax on work that sits outside IR35, and income paid to a company does not count for the NHS Pension Scheme.

A company also brings annual accounts, a Corporation Tax return, a confirmation statement and payroll. Dividends are taxed at 10.75%, 35.75% and 39.35% in 2026/27.

Compare both routes on your real figures before you decide. Our guide to salary vs dividends in 2026/27 shows how directors pay themselves now.

Does Locum Work Count Towards Your NHS Pension?

It depends on the type of work:

• GP locum sessions: NHS work as a self-employed GP locum can be pensionable. In England you send a Locum A form for each practice each month, and a Locum B form summarising the month, to Primary Care Support England with your contributions.
• Trust bank shifts: bank work is NHS employment, so it is normally pensionable through the trust’s payroll.
• Commercial agency shifts: generally not pensionable in the NHS scheme.
• Fees paid to your limited company: not pensionable in the NHS scheme, even when the work itself is for the NHS.

The GP locum forms have deadlines, and forms sent late can be rejected, so that work never counts. Keep a copy of every form and of the payment that went with it.

Tax relief on the contributions you pay as a GP locum is normally claimed through your Self Assessment return.

Can Locum Work Trigger an NHS Pension Annual Allowance Charge?

Yes. The annual allowance is £60,000 of pension growth a year across all your pensions. It tapers for high earners, to as little as £10,000, once threshold income is over £200,000 and adjusted income is over £260,000.

Extra pensionable sessions add to your NHS pension growth for the year. A busy locum year can push you over the allowance even when your salaried work alone would not.

Unused allowance from the previous three tax years can usually be carried forward. If the charge is over £2,000 and your NHS pension growth alone is over the standard allowance, you can ask the scheme to pay the charge through Scheme Pays.

The lifetime allowance was abolished from 6 April 2024, so it no longer caps how much pension you build. Our page on accountants for doctors covers how we check the annual allowance each year.

What Expenses Can Locum Doctors Claim?

As a self-employed locum, you can claim costs incurred wholly and exclusively for your locum work. These are the ones worth checking:

• your GMC annual retention fee
• medical defence or indemnity cover for work the state scheme doesn’t cover (NHS GP work in England has state-backed indemnity)
• Royal College and other professional subscriptions on HMRC’s approved list
• CPD courses and revalidation costs that keep your existing skills up to date
• travel to practices and hospitals you work at temporarily, at 45p a mile for the first 10,000 business miles and 25p after that
• parking at those workplaces
• locum agency and booking platform fees
• medical equipment, and the business share of a laptop and phone
• accountancy fees, and a share of home costs if you do your admin from home

Travel to a site you attend regularly for a long period can start to look like ordinary commuting, which is not allowable. Keep a simple log of each site and date.

If you have a PAYE post, you can claim your GMC fee and approved subscriptions against that job instead. Our list of self-employed allowable expenses covers the general rules.

Do Locum Doctors Need to Register for VAT?

Usually not. Medical care given by a registered doctor is exempt from VAT, and exempt income does not count towards the £90,000 registration threshold.

Some private work is different. Medico-legal reports written for legal proceedings are standard-rated, so a doctor doing a lot of report work should keep an eye on that income.

Frequently Asked Questions

Do locum doctors pay tax on every shift?

Yes. Bank shifts are taxed through PAYE as you go. Self-employed locum income is paid gross, and you pay the tax later through Self Assessment.

Can I pay into the NHS Pension if I locum through a limited company?

Not on that income. Fees paid to your own company are not pensionable in the NHS Pension Scheme. GP locums who want their sessions to count are paid personally and send Locum A and B forms.

Is my GMC fee tax deductible?

Yes. The GMC annual retention fee is an allowable expense. Claim it once, either against your self-employed locum profit or against your PAYE employment.

Does IR35 apply to NHS locum shifts?

It can if you work through your own company. NHS trusts are public sector, so the trust decides your status and should give you a status determination statement. Inside IR35, the fee is taxed like employment income.

How much tax should a locum doctor set aside?

Enough for Income Tax at your top rate plus National Insurance on your locum profit, and payments on account in your first years. If you already pay higher-rate tax through a PAYE post, that is over 40% of locum profit.

The Bottom Line

Locum tax is hard because of the mix, not the rates: PAYE bank shifts, gross practice income, perhaps a company, and a pension that only counts some of it.

Choose the route for each kind of work on purpose, set money aside from every payment, and check your pension forms and annual allowance every year.

We work with locum doctors across Lancashire and the North West from our Blackburn office. See how we work as accountants for locums.

For the official position on pension limits, see HMRC’s guidance on the pension annual allowance on GOV.UK.

Tax figures checked by Rehan Razzaq FCCA on 16 October 2026 for the 2026/27 tax year.