• August 29, 2019

How being a locum healthcare professional effects your tax

How being a locum healthcare professional effects your tax

How being a locum healthcare professional effects your tax 1000 667 tom

What is a locum healthcare professional?

Locum healthcare professionals are people working temporarily at a healthcare establishment – usually on behalf of the absent employee. As such, locums often don’t have an employer, at least not in the traditional sense.

If you are a locum healthcare professional, you must notify HMRC and register online before starting work as a locum.

How does being a locum healthcare professional work?

There are two ways in which most locum doctors operate

Via agencies and the NHS

An agency taxes you at source, meaning your pay and taxes in the same way a direct employer would.

As a Limited company

Operating as a limited company means you are responsible for submitting your tax returns and other accounts. However, it does provides some tax reliefs.

A limited company is a separate legal entity from you and is responsible for any legal and financial actions. Limited companies pay tax at 19%. Although any money you make belongs to the company, you pay yourself through wages (as a before tax expense) and dividends (from post-tax profits).

Salary income over the personal allowance (£12000) is taxed at 20%, and 40% for a higher rate taxpayer. There is a £2000 dividend allowance. After this, they’re taxed at 7.5% for basic rate taxpayers (20%). Operating as a limited company means you can also claim expenses on income, lowering your tax liability.


Locum healthcare professionals do not need to register for VAT. This is because healthcare services are exempt if the service is within the profession and regarding the health of the patient.

You are however required to register and charge for VAT on services that are not ‘aimed at the prevention, diagnosis, treatment or cure of a disease or health disorder’


Whether through an agency or a limited company, as a locum healthcare professional you are liable to the IR35 legislation. IR35 restricts locums if believed to be in disguised self-employment.

Get in touch today for advice on the most suitable option for you and assistance to start.

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