GP Locum Tax: Self-Employment, Expenses, and NHS Pension

If you work as a freelance GP locum in the UK, GP locum tax means registering as self-employed with HMRC, filing a Self Assessment return each year, and paying income tax and Class 4 National Insurance on your profits after allowable expenses. Payment is due by 31 January following the tax year, and most locums also make two “payments on account” toward the following year’s bill. Around that core sit several extras: NHS pension paperwork with a strict deadline, IR35 if you work through a company, and, from April 2026, quarterly digital reporting under Making Tax Digital.

Are You Actually Self-Employed?

Do not assume the answer. HMRC’s guidance is explicit that a locum’s status should not be assumed from the job title, and that each engagement’s contractual terms have to be reviewed individually.1GOV.UK. Employment Status Manual – Particular Occupations: Doctors – Locums Some doctors who describe themselves as locums are engaged as assistants rather than standing in for another GP, and their earnings are treated as employment income subject to PAYE and Class 1 NI.

Most freelance GP locums who set their own rates, invoice multiple practices, and receive no holiday or sick pay will be classified as self-employed.2Health Education England. Becoming a Freelance (Locum) GP Once you start, register with HMRC by 5 October following the end of the tax year in which you began. Miss that and you can face a “failure to notify” penalty based on the tax left unpaid.3GOV.UK. Self Assessment Tax Returns – Penalties

What You Will Pay

As a sole trader, your locum profit is added to your personal income and taxed through Self Assessment. For 2025/26:

  • Personal allowance of £12,570, reducing by £1 for every £2 earned above £100,000
  • Basic rate of 20% on income from £12,571 to £50,270
  • Higher rate of 40% on income from £50,271 to £125,140
  • Additional rate of 45% on income above £125,140

These bands have been frozen since 2021 and are expected to stay the same for 2026/27.4GOV.UK. Income Tax Rates and Personal Allowances

On top of income tax, self-employed locums pay National Insurance. Class 2 is no longer a mandatory payment. From April 2024, self-employed earners with profits at or above the small profits threshold are treated as having paid Class 2 automatically, preserving State Pension entitlement without handing any money over. If your profits fall below £6,725, you can still pay Class 2 voluntarily to build your benefit record.5The Association of Taxation Technicians. Class 2 National Insurance – Whats Changing From April 2024

Class 4 is the real cost. For 2025/26 you pay 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.6GOV.UK. Rates and Allowances – National Insurance Contributions It’s calculated inside your Self Assessment return, so there is no separate payment to make.

Expenses You Can Deduct

Every pound legitimately deducted from your turnover reduces the profit you pay tax on. The test is that the expense must be incurred “wholly and exclusively” for your trade. If an expense has a dual purpose, the whole amount fails the test unless you can clearly separate the business portion.7GOV.UK. Business Income Manual – BIM37007 – Wholly and Exclusively: Overview

Common deductible expenses for locum GPs include:

Working From Home

If you use part of your home for admin like invoicing or updating records, you can either work out the actual proportion of household costs attributable to that space, or use HMRC’s simplified flat rates based on hours worked from home each month: £10 for 25 to 50 hours, £18 for 51 to 100 hours, and £26 for 101 hours or more. The flat rate is easier but usually smaller than the actual cost method.11GOV.UK. Simplified Expenses if Youre Self-Employed – Working From Home

CPD and Training

CPD courses, clinical updates, and conferences are deductible so long as they maintain or improve skills you already use, or help you keep up with changes in your field. Training for an entirely new career, or to expand into an unrelated area, does not qualify.12GOV.UK. Expenses if Youre Self-Employed – Training Courses

Sole Trader or Limited Company

Most GP locums operate as sole traders. Some set up a private limited company instead, which pays Corporation Tax on its profits (19% up to £50,000, 25% above £250,000, with marginal relief between) and then pays the doctor a small salary plus dividends.13GOV.UK. Corporation Tax Rates, Expenses and Reliefs There is more administration involved, including annual accounts filed at Companies House14GOV.UK. Preparing and Filing Companies House Accounts and a personal return as a company director.

The catch is IR35. Off-payroll working rules apply to anyone providing services through an intermediary such as a personal service company. If, without the company in the middle, you would effectively be an employee of the practice, the engagement falls “inside IR35” and you are taxed as an employee.15British Medical Association. BMA IR35 Tax Guidance Since April 2021, medium and large clients (which includes NHS trusts and most practices that engage locums through agencies) must make that determination and give you a Status Determination Statement. Only when you work directly for a small private practice does the responsibility remain with your own intermediary.16GOV.UK. Understanding Off-Payroll Working (IR35) Inside IR35, tax and NI are deducted at source. HMRC looks at whether the practice controls how, when, and where you work, whether you can send a substitute, and whether you bear financial risk. Contract wording matters, but only if it reflects day-to-day reality.

The NHS Pension Side of Your Tax Year

Freelance locums can participate in the NHS Pension Scheme, but it needs active management. You track pensionable pay through Locum A and B forms and submit them to the primary care organisation (through PCSE Online in England) so your contributions and the employer contribution are correctly allocated.17Primary Care Support England. Submit Locum A and B Forms

Pensionable income is 90% of the fee, excluding the employer contribution element. The employer contribution rate is 14.38%, including a 0.08% administration levy. If you receive an employer contribution as part of your fee but decide not to pension the work, you must return that portion to the practice.

The trap is the 10-week deadline. NHS Pension Regulations state that you cannot pension any period of locum work that ended more than 10 weeks before your application. Late forms are rejected with no exceptions, even for sickness absence.18Primary Care Support England. Pension Contributions – Locum A and B Submitting through PCSE Online creates an automatic audit trail of when you sent the form, which protects you in a dispute.19NHS Pensions. NHS Pensions – GP Locum Form B 1 April 2025 to 31 March 2026 Your employee contributions reduce your taxable profit, so the net cost is lower than the headline rate.

Filing and Paying

To file, you need your Unique Taxpayer Reference (UTR), records of every invoice you issued during the year, receipts for business expenses, and a mileage log. If you also did any salaried NHS work, get your P60 or P45 showing tax already deducted through PAYE. Returns go in through the HMRC Government Gateway.

Your tax bill for the year is due by 31 January following the end of the tax year. That same date carries your first “payment on account” toward next year’s bill, with a second following on 31 July.20GOV.UK. Pay Your Self Assessment Tax Bill Each payment on account is 50% of the previous year’s income tax and Class 4 NIC liability. You are not required to make them if your Self Assessment bill was under £1,000, or if more than 80% of your total tax was already collected through PAYE.

This is where new locums get stung. In your first year of Self Assessment, the January payment can include the full year’s tax plus 50% of next year’s projected bill: effectively 150% of one year’s tax at once. If your income drops, form SA303 lets you reduce your payments on account, but underestimating means interest on the shortfall.21GOV.UK. Claim to Reduce Payments on Account

Miss the 31 January filing deadline and you get an automatic £100 penalty, even if you owe no tax. After three months, daily £10 penalties start, capped at £900. After six months, a further 5% of tax due or £300 (whichever is greater) is added, and the same again at twelve months.3GOV.UK. Self Assessment Tax Returns – Penalties Late payment also attracts interest, and HMRC rarely waives any of it.

What Changes in April 2026

From 6 April 2026, HMRC is rolling out Making Tax Digital for Income Tax Self Assessment. If your qualifying self-employment income (gross, before expenses) exceeded £50,000 for 2024/25, you must comply from April 2026. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.22GOV.UK. Find Out if and When You Need to Use Making Tax Digital for Income Tax

Most locums working regularly will be in the first wave. MTD requires digital records kept in compatible software and quarterly summaries of income and expenses submitted to HMRC. The first quarterly update for 2026/27 is due by 7 August 2026. The payment dates do not change: 31 January and 31 July.23The Association of Taxation Technicians. Making Tax Digital – Frequently Asked Questions If you are not already using cloud accounting software, getting set up before April 2026 is worth doing sooner rather than later.

Extras That Catch Locums Out

A few items sit outside the main tax calculation but hit your bill through Self Assessment.

Student loans. Repayments are collected through your return based on your total income. Plan 1 borrowers repay 9% of income above £26,900; Plan 2 borrowers, 9% above £29,385. If you also have salaried income, HMRC combines it, which can produce a larger lump sum at filing than expected.24GOV.UK. Repaying Your Student Loan – How Much You Repay

High Income Child Benefit Charge. If your adjusted net income exceeds £60,000 and you or your partner receive Child Benefit, you repay 1% of the benefit for every £200 of income above the threshold. At £80,000 or more, you repay all of it. It is collected through Self Assessment and it applies to individual, not household, income, which is why many locums overlook it.25GOV.UK. High Income Child Benefit Charge

VAT. Most clinical work by a registered medical professional is VAT-exempt, so you do not charge VAT on your locum fees and cannot reclaim VAT on your purchases. The exemption covers services that protect, maintain, or restore a patient’s health. Non-clinical work is different: fees for medical reports, insurance assessments, employment health checks, and similar medico-legal work are standard-rated at 20%. If taxable turnover from those activities exceeds £90,000 in any rolling 12-month period, you must register for VAT.26GOV.UK. Increasing the VAT Registration Threshold Most locums never come close, but those doing significant medico-legal or cosmetic work need to track taxable turnover separately.