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 (45p/25p AMAP), 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.
- Class 2 NI removed from April 2024. Only Class 4 NI applies now: 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:
- AMAP rate: 45p/mile first 10,000 miles, 25p/mile thereafter (unchanged in 2026/27)
- 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 = £3,600-£6,750 of allowable expense.
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) | £3,600-£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 |
| Home office (simplified) | £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 × £0.45 = £3,600
- GMC + RCGP + MDU: £4,000
- Other expenses (CPD, phone, home office): £1,500
- Total expenses: £9,100
- Taxable profit: £40,900
- Personal Allowance: £12,570
- Income tax: (40,900 - 12,570) × 20% = £5,666
- Class 4 NI: (40,900 - 12,570) × 6% = £1,700
- Total tax: £7,366
- Net income: £33,534 cash out of £50,000 turnover (67%)
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
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