NHS Locum Doctors and Self Assessment Tax Returns

Last updated: 10 November 2026 · Current UK tax year: 2026/27

If you work as an NHS locum doctor, your tax position is rarely straightforward. Whether you work through a locum agency, pick up shifts directly with NHS trusts, or operate through a limited company, HMRC will almost certainly expect you to submit a Self Assessment tax return. This article explains exactly when you need to register, what income and expenses to declare, and what happens if you get it wrong.

• Who needs to submit a Self Assessment tax return?
• How locum income is taxed
• Expenses NHS locum doctors can claim
• The NHS pension and your tax return
• Working through a limited company
• Making Tax Digital and upcoming changes
• Deadlines and penalties
• How NDCA can help
• Frequently asked questions

Who needs to submit a Self Assessment tax return?

HMRC requires you to submit a Self Assessment tax return if you are self-employed, earn income outside of PAYE, or if your total income exceeds certain thresholds. For NHS locum doctors, this almost always applies. Here are the situations that trigger the requirement:

• You are a sole trader locum earning self-employed income from one or more NHS trusts or agencies.
• You have PAYE employment with one trust but earn additional locum income on top of that.
• You earn more than £100,000 in a tax year from any source, because your personal allowance tapers off and you need to declare this via Self Assessment regardless of PAYE.
• You receive dividend income from a limited company above the £500 dividend allowance (2026/27).
• You have untaxed income such as rental income, investment income or overseas income.
• You need to claim tax relief on pension contributions above the basic rate, which is very common for NHS locum doctors making additional voluntary contributions.

Even if an agency pays you and deducts tax at source, that does not automatically mean your tax affairs are settled. If you have multiple income sources or allowable expenses to claim, you will still need to file a return.

How locum income is taxed

How your locum income is taxed depends on how you are engaged.

Sole trader locums

If you work as a self-employed locum and are not operating through a limited company, you are a sole trader. All your locum income is taxed as self-employment income on your Self Assessment return. You pay income tax at 20% on profits between your personal allowance of £12,570 and £50,270, then 40% on profits between £50,270 and £125,140, and 45% above £125,140 (all 2026/27 rates). You also pay Class 4 National Insurance contributions on your profits. Check the latest HMRC guidance for the current Class 4 rates.

Locums paid via PAYE through an agency

Some locum agencies put doctors on their own payroll and deduct tax and National Insurance under PAYE. This can look tidy, but it creates problems if you have more than one agency or if you also hold a substantive NHS post. HMRC will apply your personal allowance to only one source, and the other income is then taxed at the basic or higher rate depending on your total earnings. You will need to submit a Self Assessment return to reconcile the position and claim any allowable expenses, which cannot be claimed through PAYE alone.

IR35 and umbrella companies

If you work through an umbrella company or if IR35 applies to your engagement, you will typically be treated as employed for tax purposes. You should still check whether you have any additional income or pension relief claims that require a Self Assessment return. Many locum doctors wrongly assume an umbrella arrangement removes all Self Assessment obligations. It does not, in many cases.

Expenses NHS locum doctors can claim

One of the main reasons to file a Self Assessment return properly, rather than relying on an agency to sort your tax, is the ability to claim allowable business expenses. These reduce your taxable profit and therefore reduce your tax bill. As a self-employed locum, you can typically claim:

• GMC registration fees and medical indemnity insurance premiums
• Mandatory training and CPD costs that are directly related to your clinical practice
• Professional subscriptions such as BMA membership
• Travel costs between different work locations (not from home to a fixed permanent workplace)
• Stationery, postage and office supplies used for your practice
• Accountancy fees
• A proportion of home office costs if you work from home on administrative tasks
• Equipment purchased wholly for clinical use

You cannot claim expenses that are personal in nature or that have a dual personal and business purpose without apportioning them correctly. HMRC expects records. That means keeping receipts, invoices and bank statements that support every claim. If your records are in disarray, our bookkeeping catch-up service can get everything in order before we file your return.

Keeping accurate, up-to-date records throughout the year is not something you should leave to the last minute. NDCA’s bookkeeping service takes that task off your plate entirely so you can focus on your clinical work.

The NHS pension and your tax return

The NHS Pension Scheme is a defined benefit scheme and it comes with significant tax implications for many locum doctors, particularly those in the higher or additional rate income tax bands.

Annual allowance

The pension annual allowance for 2026/27 is £60,000. If your pension input amount (the growth in your pension rights) exceeds this figure in a given tax year, you face an annual allowance charge. For higher-earning locum doctors, this is a real and recurring issue. The charge is declared and paid through your Self Assessment return.

Scheme Pays

If you have an annual allowance charge, you may be able to ask the NHS Pension Scheme to pay it on your behalf in exchange for a reduction in your future pension. This is called Scheme Pays. You still need to declare the charge on your Self Assessment return even if you use Scheme Pays.

Tax relief on additional contributions

If you make personal pension contributions to a private pension outside the NHS scheme, you may be entitled to claim additional higher-rate tax relief through your Self Assessment return. The pension provider will claim basic rate relief at source, but higher-rate and additional-rate relief must be claimed through your return. Many locum doctors overlook this and overpay tax as a result.

Working through a limited company

Some locum doctors operate through a personal service company or locum limited company. This can be tax-efficient when done correctly, but it adds a layer of compliance obligations.

As a director and shareholder of your own limited company, you will typically take a combination of salary and dividends. The salary is processed through payroll and subject to PAYE and National Insurance. Dividends are paid from post-tax profits and taxed at dividend rates: 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers (2026/27). The dividend allowance is just £500 in 2026/27, so almost all dividend income above that level will be taxable.

Your company will need to file annual accounts and a Corporation Tax return with HMRC. The company pays Corporation Tax at 19% on profits up to £50,000 or 25% on profits over £250,000, with marginal relief between those thresholds (2026/27). You as an individual will also need to submit a personal Self Assessment return to declare your salary above the personal allowance, your dividends and any other income. If you are thinking about setting up a limited company, speak to us about company formation and the tax planning that should sit alongside it.

IR35 rules apply to limited company locums. If HMRC determines that your engagement with an NHS trust would be one of employment were it not for the company structure, the income is treated as employment income and taxed accordingly. NHS trusts are public sector bodies and are responsible for assessing IR35 status. Many trusts issue blanket determinations. If IR35 applies to your engagements, you need expert advice on how to structure your affairs.

Making Tax Digital and upcoming changes

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is due to start in April 2026 for self-employed individuals and landlords with gross income over £50,000. If you are a sole trader locum earning above that threshold, you will need to keep digital records and submit quarterly updates to HMRC using MTD-compatible software, in addition to a final end-of-year declaration.

This is a significant change to how self-employed locum doctors report their income. The quarterly submissions are not tax payments. They are updates of income and expenses. Your final tax liability is still calculated at the end of the tax year. However, the record-keeping requirements are more demanding than the current annual return system. NDCA manages this process for clients so there is nothing for you to worry about operationally.

Deadlines and penalties

Missing HMRC deadlines costs money. Here are the key dates to know:

• 5 October: Deadline to register for Self Assessment if you are filing for the first time for the previous tax year.
• 31 January: Online Self Assessment filing deadline for the tax year ending the previous 5 April. Your balancing payment for that year and your first payment on account for the current year are both due on this date.
• 31 July: Second payment on account deadline.

Miss the 31 January filing deadline and HMRC charges an automatic £100 penalty, even if you owe no tax. Further daily penalties apply after three months. Interest accrues on any unpaid tax from 31 January. If you have never registered for Self Assessment and HMRC later discovers untaxed income, penalties for failure to notify can be substantial, particularly if HMRC views the failure as deliberate.

If you are registering for the first time, do not wait until January. The registration process takes time and you need your Unique Taxpayer Reference before you can file.

How NDCA can help

NDCA is an ACCA-regulated accountancy practice that works with healthcare professionals including NHS locum doctors, GPs and consultants. We understand the specific tax issues that come with locum work: multiple income sources, the NHS pension annual allowance, IR35, limited company structures and the upcoming MTD obligations.

We offer fixed monthly fees so you always know what you are paying, and you get a named accountant who knows your situation. When you contact us, we normally reply the same day.

If you are currently with another accountant and feel you are not getting the right advice for your situation, it is straightforward to move. Find out more about switching accountants.

Whether you need help with your personal Self Assessment, your limited company’s annual accounts and Corporation Tax, or ongoing bookkeeping throughout the year, NDCA handles everything under one roof on a fixed monthly fee.

Tax for NHS locum doctors is genuinely complex. Getting it right means paying only what you owe, claiming every expense and relief you are entitled to, and meeting every HMRC deadline. Getting it wrong means penalties, interest and a stressful HMRC enquiry. The right accountant removes that risk entirely.

Frequently asked questions

Do I need to register for Self Assessment if tax is already deducted by my agency?

Possibly, yes. If your agency deducts tax under PAYE, that covers only the income they pay you. If you have any other income, need to claim expenses, or earn over £100,000 in total, you will still need to register for and file a Self Assessment tax return. You should check your position rather than assume PAYE through an agency is sufficient.

Can NHS locum doctors claim travel expenses?

Yes, but only travel between different work locations. You cannot claim ordinary commuting costs between your home and a fixed regular workplace. If you are genuinely travelling between different trusts or clinical sites as a locum, those costs are likely allowable. Keep records of every journey, including dates, distances and the purpose of each trip.

What is the Self Assessment deadline for locum doctors?

The deadline to file your Self Assessment tax return online and pay any tax owed is 31 January following the end of the tax year. For the 2025/26 tax year (which ends 5 April 2026), the filing and payment deadline is 31 January 2027. If you are registering for the first time, you must notify HMRC by 5 October following the end of the tax year in which you first had taxable income to declare.

Does IR35 affect NHS locum doctors working through a limited company?

Yes. NHS trusts are public sector bodies and are responsible for assessing whether IR35 applies to each engagement. If a trust determines that your role falls inside IR35, your income from that engagement is taxed as employment income, which significantly reduces the tax efficiency of operating through a limited company. You should take professional advice specific to your circumstances before assuming a limited company structure will be beneficial.

Do I need to declare NHS pension contributions on my Self Assessment return?

You may need to. If your total pension input amount exceeds the annual allowance of £60,000 (2026/27), you must declare the excess and pay an annual allowance charge through your Self Assessment return. If you make personal pension contributions outside the NHS scheme, you can claim higher-rate or additional-rate tax relief through your return that your pension provider will not automatically claim for you.

What happens if I have not filed Self Assessment returns for previous years?

You need to bring your returns up to date as soon as possible. HMRC charges automatic penalties for late filing and late payment, plus interest on any outstanding tax. In some cases HMRC may also charge a failure to notify penalty if you should have registered but did not. NDCA can review your position, calculate what you owe and prepare the outstanding returns to get you compliant. The sooner you act, the lower your exposure to further penalties.