GP locum tax guide: a practical starting point for self-employed GPs

If you work as a sole trader, start with the money the locum business earns and deduct expenses that are allowable for tax. The result is taxable business profit, not the amount left in the business bank account. Drawings for personal use are not a business expense, and buying an item does not automatically make its full cost deductible.

Income Tax is then calculated across your taxable income, not locum work in isolation. A salaried GP post, bank interest, dividends, rent and other income can use allowances or tax bands before locum profit is considered. Scottish income-tax bands differ from those in England, Wales and Northern Ireland. Self-employed profits may also create Class 4 National Insurance, while PAYE work may already have Class 1 National Insurance deducted.

Self Assessment is the process used to report the figures and calculate what remains due. It is not a separate tax. A newly qualified GP who works salaried sessions and occasional self-employed locums may therefore have both PAYE records and self-employment pages in the same return. Do not assume tax deducted from the salaried role covers the locum profit.

The UK tax year runs from 6 April to 5 April. If you first need to file a return, HMRC says you should normally register for Self Assessment by 5 October following the end of the relevant tax year. Registration produces or reconnects the Unique Taxpayer Reference (UTR) used for Self Assessment. Keep the UTR separate from your GMC number, National Insurance number and Government Gateway sign-in details: they are not interchangeable.

Online tax returns and the balancing payment are normally due by 31 January after the tax year. Paper returns normally have an earlier 31 October deadline. A payment on account towards the following year can fall due on the same 31 January, with the second instalment on 31 July. File earlier than January if you want time to understand the bill rather than discovering it days before payment.

Payments on account are advance instalments towards the next Self Assessment bill. HMRC normally asks for them when the previous year's Self Assessment tax was at least £1,000 and less than 80% of the total tax was collected outside Self Assessment. Each instalment is usually half of the relevant previous-year bill and is due on 31 January and 31 July.

This is why a first substantial GP locum tax bill can feel like double taxation. In January you may pay the tax still due for the year already finished and the first half of an estimated bill for the year currently under way. The July instalment pays the second half. Those advance payments are credited against the later bill; they are not a second tax on the same profit.

If the later liability is higher, a balancing payment remains. If it is lower, the account is adjusted. HMRC allows a claim to reduce payments on account when you reasonably expect the next bill to be lower, but an excessive reduction can lead to interest. Ask your accountant to review the evidence before changing them.

There is no special list that makes a cost allowable just because a GP paid it. For a sole trader, the central question is whether the cost was incurred wholly and exclusively for the business, followed by category-specific rules. Mixed costs need a justifiable business element, and capital purchases can be treated differently from day-to-day expenses.

The classifications below are a practical review list, not a guarantee. Keep the invoice or receipt, payment date, business purpose and any reasonable calculation used to split business from private use. Your accountant needs facts, not a folder labelled simply “expenses”.

Eligible sole traders can calculate vehicle expenses using HMRC simplified mileage or use the relevant actual-cost and capital-allowance rules. Under simplified mileage, the flat rate covers the vehicle's running costs; qualifying parking and other travel costs can be considered separately. From 6 April 2026, HMRC's simplified rate for cars and goods vehicles is 55p for the first 10,000 business miles and 25p thereafter. It was 45p and 25p before that date.

The mileage method appeals to many locums because the record is a journey log rather than a collection of fuel, insurance, servicing, repair and private-use calculations. Actual costs may produce a different result. Convenience does not prove which method is financially better, and the 10,000-mile threshold applies across relevant business miles rather than restarting for each practice.

Consistency matters. HMRC says that once simplified mileage is used for a vehicle, it must continue for that vehicle while it remains in business use. You also cannot use simplified mileage for a vehicle where disqualifying capital allowances or purchase costs have already been claimed. Speak to your accountant before choosing, especially when acquiring or replacing a car.

NHS Pension Scheme contributions interact with taxable income, but the correct treatment depends on the work, scheme route and how contributions were handled. Do not enter a pension figure from memory or assume that every amount described as “pension” on an invoice receives the same treatment.

For freelance GP locum work in England and Wales, retain the relevant Form A and Form B records, payment evidence, pensionable-pay calculations and submission confirmations. Keep annual benefit or pension statements and any correspondence about corrections. If you also have salaried NHS work or private pension contributions, give your accountant each stream separately.

Pension tax can become more complex for doctors affected by annual-allowance calculations or growth across NHS employments. airGP can keep session-level pension status and logged dates with the underlying work, but it does not establish pensionability, calculate pension tax relief or submit pension forms. Use current NHS Pensions guidance and an accountant or adviser experienced with medical pensions.

A sole trader and a limited company are different legal and tax structures. A company has its own accounts, Corporation Tax, statutory filings and usually payroll or dividend administration. That can mean higher accountancy cost and more decisions about how money leaves the company. It is not automatically more tax-efficient.

For GP locums, the decision can also affect NHS pension access, contracts, indemnity, banking and how a practice or agency engages you. Employment-status and off-payroll working rules, often discussed under the label IR35, depend on the real engagement rather than the wording on an invoice. Some NHS or practice work may not fit the structure you hoped to use.

Do not incorporate because a colleague did. Ask a medical accountant to model the expected work, income extraction, pension intentions, administrative cost and status risk. Revisit the structure if your mix of salaried, direct practice, agency and non-clinical work changes.

Making Tax Digital for Income Tax began mandatorily on 6 April 2026 for eligible sole traders and landlords with qualifying gross income over £50,000, based on the relevant earlier return. The threshold falls to over £30,000 from April 2027 and over £20,000 from April 2028 under the current rollout. Qualifying income broadly looks at gross self-employment and property income before expenses, not profit.

Eligible users keep digital income and expense records, send quarterly updates with compatible software and submit the tax return through the MTD process. Quarterly updates are summaries of records to date; they are not four final tax returns and do not create quarterly Income Tax payment dates. The normal 31 January payment process remains, including payments on account where applicable.

An accountant still matters. They can act as an agent, review adjustments and handle matters that are not evident from transaction totals. Software cannot decide whether a journey was allowable, whether work was a supply of staff or whether a course created a new skill.

airGP's optional MTD add-on is intended to connect supported records with HMRC and submit supported MTD for Income Tax quarterly updates. Use it to keep session income, expenses and supported UK property records current; use your accountant for tax treatment and the final position. Read the dedicated MTD guide for eligibility, scope and current product terms.

A useful tax workflow is mostly a monthly reconciliation. Twenty focused minutes while the clinical work is still recognisable is more reliable than a weekend of guessing ten months later.

Ask your accountant how they want the records structured. Sending a clean export plus supporting evidence is usually more useful than forwarding hundreds of unlabelled files. Tell them what is incomplete or uncertain rather than silently choosing a tax category.

The expensive mistakes are often record failures rather than complicated tax law. A missing invoice understates income and leaves work unpaid; a missing journey loses the evidence needed to consider mileage; a reduced payment on account without justification can create interest.