Locum tax in one paragraph: most UK medical locums are self-employed sole traders, registered for Self Assessment, declaring annual income on the SA103 supplementary page. Locum work is VAT-exempt under the medical exemption (so no need to register for VAT regardless of turnover). Major deductions: mileage between assignments (simplified mileage rates of 55p then 25p a mile in 2026/27), defence society subscriptions (MDU/MPS/MDDUS), GMC registration, professional subscriptions, indemnity for private work. Locum NHS pension membership is optional through the GMS / GDS extension scheme — most opt out, but staying in builds valuable NHS Pension Scheme service.
Self-employment registration
If you start locum work:
- Register for Self Assessment by 5 October following the end of your first tax year of self-employment. Late registration triggers penalties.
- Compulsory Class 2 NI ended from 6 April 2024. With profits of £7,105 or more it is treated as paid, so only Class 4 NI is charged: 6% above £12,570 (combined with employment earnings) up to £50,270, then 2% above.
- Submit annual SA100 + SA103 supplementary by 31 January following tax year end (online), or 31 October (paper).
- Pay tax by 31 January, with payments on account in January and July if liability exceeds £1,000.
You can register online: gov.uk/register-for-self-assessment.
The medical VAT exemption
Medical services provided by registered medical professionals to patients are VAT-exempt under VAT Notice 701/57. This means:
- Locums do NOT need to register for VAT regardless of turnover (no £90,000 threshold concern)
- You do NOT charge VAT on your invoices for medical services
- You CANNOT reclaim VAT on business inputs against the exempt supplies
Exception: medico-legal work (court reports, insurance assessments, fitness-to-work assessments) is VAT-standard-rated. If you do significant medico-legal work, you may need to VAT-register voluntarily. Above £90k of medico-legal turnover, you MUST register.
Practical implication: most locums never need to engage with VAT at all. Don't accidentally VAT-register if you're purely doing clinical work.
NHS Pension Scheme as a locum
Locums can join the NHS Pension Scheme through specific routes:
- GMS/GDS extension scheme: for GP locums, allows pensionable practice income through a "Type 2" or "Type 3" arrangement
- Trust-based locum work: some trusts allow you to be added to their NHS pension scheme as an employee for the shifts
- Bank work: trust banks often include NHS pension
The decision to opt in vs out depends on:
- Contribution rate (9-14% gross) vs. the value of an additional year of NHS pension service
- Cash flow (joining means more deductions now)
- Career horizon (joining for 1-2 years offers little vs. joining for 10+ years offers strong returns)
Mileage between assignments
The biggest expense deduction for locums is mileage between assignments:
- Simplified mileage rate (self-employed): 55p a mile for the first 10,000 business miles in 2026/27 (45p before 6 April 2026), 25p a mile after that
- Travel from home to your "first temporary workplace" of the day = deductible
- Travel between sites in the same day = deductible
- Travel from "last temporary workplace" home = deductible
- Travel to a "permanent workplace" = NOT deductible (this is "ordinary commuting")
A locum doing 4 different clinics across the week at 20 miles each way easily accumulates 8,000-15,000 deductible miles/year = £4,400-£6,750 of allowable expense at the 2026/27 rates (8,000 × 55p = £4,400; 10,000 × 55p + 5,000 × 25p = £6,750).
HMRC scrutinises mileage claims. Keep a mileage log with date, route, purpose, mileage. The "Locumtenens" record-keeping is essential.
Expenses every locum should claim
| Expense | Typical annual |
|---|---|
| Mileage (8,000-15,000 miles) | £4,400-£6,750 |
| GMC registration | £433 |
| Defence society (MDU/MPS) | £500-£3,500 |
| Indemnity for private work | £500-£1,500 |
| BMA / professional subscriptions | £500-£700 |
| CPD courses | £500-£3,000 |
| Mobile phone (business portion) | £200-£500 |
| Working from home (simplified flat rate: £10, £18 or £26 a month by hours worked at home) | £120-£312 |
| Accountancy fees | £500-£1,500 |
| Subsistence (overnight) | Variable |
A typical full-time locum can deduct £8,000-£15,000 of expenses annually — material for tax planning.
The "off-payroll" IR35-equivalent rules for locums
Strictly, IR35 applies only to limited-company contractors. But the principle applies in disguise:
- Self-employment status can be challenged if HMRC believes you're really an employee in all but name
- Long-term locum placements (24+ months at one practice) raise red flags
- Working exclusively for one practice with no other locum work suggests employment
- Practices reluctant to offer locums "self-employed" status — they may insist on umbrella or PAYE engagement
Defensive practices for self-employed locums: maintain multiple clients, set your own rates, work to your own protocols (within clinical governance), bring your own equipment where possible, accept liability for your own clinical decisions.
Worked example: GP locum, mixed practice and out-of-hours
Dr A is a GP locum: 100 sessions/year at £500 each = £50,000 turnover. 8,000 miles between practices.
- Turnover: £50,000
- Mileage expense: 8,000 × £0.55 = £4,400
- GMC + RCGP + MDU: £4,000
- Other expenses (CPD, phone, home office): £1,500
- Total expenses: £9,900
- Taxable profit: £40,100
- Personal Allowance: £12,570
- Income tax: (40,100 - 12,570) × 20% = £5,506
- Class 4 NI: (40,100 - 12,570) × 6% = £1,652
- Total tax: £7,158
- Net income: £32,942 out of £50,000 turnover (66%)
Common locum tax mistakes
- Not registering for Self Assessment in year 1. Penalty cascade kicks in fast.
- Forgetting payments on account. Tax due is split: balancing payment Jan + first POA Jan + second POA July. Many first-year locums get a nasty cash flow surprise.
- Mileage records insufficient. HMRC's checking standard is exacting. Keep a contemporaneous mileage diary.
- Treating sessions as cash. The income is taxable regardless of payment method.
- Falling for "off-payroll umbrellas". If an umbrella offers a high take-home rate, it's almost certainly a loan scheme. Run.
- Not engaging with NHS Pension membership decision. For long-term locums, opting in builds genuine retirement security worth far more than the contribution cost.
Sources
Related profession-specific guides
How UK Tax Drag holds itself to account
Every page is reviewed against the editorial standards, written from primary sources and sourced openly, with corrections listed in the changelog. No affiliate revenue. No sponsored content. No paid placements.
UK Tax Drag is an independent publication by Finsolve Consulting Limited, not affiliated with or endorsed by HMRC, GOV.UK or any government body.