New Locum Doctor Tax Starter Guide

How much tax does a locum doctor pay in the UK?

New locum doctor tax starter guide pay income tax on taxable profit at 20%, 40% and 45%, plus Class 4 National Insurance on self-employed profit. Payments on account mean your first bill can include half of next year's tax too. Where income also comes from overseas, residence status and split year treatment decide what the UK taxes.

Should a locum doctor be a sole trader or a limited company?

A limited company can suit new locum doctor tax starter guide with substantial private or outside-IR35 income that is not all needed to live on, because profit is taxed at corporation tax rates and can be paid out over time. It brings extra accounts, payroll and filing costs, and NHS employment income cannot move into it. We model sole trader against limited company on your real figures first.

Help with this question: Limited Company Accounts & Corporation Tax for Doctors & Healthcare Professionals

Help with this question: Self Assessment Tax Returns for Doctors & Healthcare Professionals

Is locum work through an agency or trust bank inside IR35?

For locum engagements with NHS bodies, the hirer must decide IR35 status and issue a Status Determination Statement; the small-company exemption does not apply to public bodies. The test looks at control, substitution and mutuality of obligation in the actual working arrangement. You can ask the hirer to review a determination you disagree with, and it must respond within 45 days.

Help with this question: IR35 Reviews for Doctors & Healthcare Professionals

How much of my locum income should I set aside for tax?

You should set aside a portion of every invoice to cover Income Tax, National Insurance, and potential student loan repayments. The exact percentage depends on your total annual earnings and tax bracket. Remember that payments on account are due every 31 January and 31 July. Regular monitoring ensures you have sufficient funds for these deadlines.

Why is my first tax bill as a locum so high (payments on account)?

Your first bill often includes the tax for the previous year plus the first payment on account for the following year. Payments on account are due on 31 January and 31 July. Each payment is normally half of the previous year's total tax liability. This can effectively result in paying 150% of your tax in one go.

Help with this question: Self Assessment Tax Returns for Doctors & Healthcare Professionals

Do locum doctors have to follow Making Tax Digital from April 2026?

Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords whose qualifying income (gross self-employment plus property income) is over £50,000, falling to £30,000 from April 2027 and £20,000 from April 2028. PAYE salary does not count. New locum doctor tax starter guide trading through a limited company or a partnership are not brought in yet. We set up compatible software and file the quarterly updates for you.

Help with this question: Bookkeeping & Making Tax Digital for Doctors & Healthcare Professionals

Can locum doctors pay into the NHS Pension Scheme?

Most NHS doctors and many healthcare staff are members of the NHS Pension Scheme. Contributions are deducted through payroll, and locum or private work can count only through the correct forms. High earners should check the annual allowance each year, as pension growth can trigger a tax charge.

Help with this question: NHS Pension Tax & Annual Allowance for Doctors & Healthcare Professionals

Is an umbrella company a good option for locum shifts?

An umbrella company employs you and runs your pay through PAYE, so income tax, employee and employer National Insurance and its margin all come out of the assignment rate. It suits short-term or inside-IR35 work. A limited company can be more efficient for genuinely outside-IR35 work, but has more admin. We compare both on your actual rates.

Help with this question: IR35 Reviews for Doctors & Healthcare Professionals

What records should a locum keep for HMRC?

Locums must keep all invoices issued and evidence of all professional expenses incurred. You should maintain records of mileage, professional subscriptions, and any equipment purchases. Banks statements and NHS pension contribution records are also essential. HMRC requires these records to be kept for at least five years after the tax return deadline.

How do I register as self-employed with HMRC when I start locum work?

Employment status depends on the real working relationship: who controls the work, whether you can send a substitute, whether you carry financial risk and how integrated you are. A contract label alone does not decide it. HMRC's Check Employment Status for Tax tool and case law set the tests, and getting it wrong can leave the engager owing PAYE.

What documents do I need for my return?

You typically require P60s, P11D forms, interest certificates, and records of all business income and expenses. Medical.Accountants provides a tailored checklist based on your specific healthcare role. We will request these details during our onboarding process. Providing comprehensive documentation ensures your tax position is accurately calculated.

What are payments on account?

Payments on account are advance payments towards your next Self Assessment bill, normally due on 31 January and 31 July. Each is usually half the previous year’s relevant Income Tax and Class 4 National Insurance bill, excluding Capital Gains Tax and student loans. Exceptions apply where the bill is below £1,000 or over 80% was collected at source.

Help with this question: Self Assessment Tax Returns for Doctors & Healthcare Professionals

Can I amend a return after filing?

You can generally amend a Self Assessment return within 12 months of the 31 January filing deadline. This allows you to correct errors or include forgotten information. Medical.Accountants can assist in reviewing previous submissions to ensure accuracy. Tax refunds can be claimed for up to four previous tax years.