Locum Tenens and Self-Employment Tax Issues

Working as a locum tenens doctor offers the flexibility and variety that many medical professionals find appealing. However, this career choice also brings a unique set of financial challenges, particularly when it comes to taxes. Understanding these issues and how to navigate them can significantly impact your financial health. In this article, we will explore how to effectively deal with locum tenens and self-employment tax issues in the UK.

Understanding Self-Employment Tax Obligations

As a locum tenens doctor, you are typically considered self-employed. This status means you are responsible for managing your own tax affairs, which include paying income tax, National Insurance contributions, and sometimes VAT.

  1. Registering with HMRC: Ensure you are registered as self-employed with HM Revenue & Customs (HMRC). This step is crucial for tracking your earnings and fulfilling your tax obligations.
  2. Income Tax: Self-employed individuals must pay income tax on their profits. The tax rate depends on your total taxable income and follows the UK’s standard income tax bands. Be sure to keep accurate records of all income and allowable expenses to correctly calculate your taxable profit.
  3. National Insurance Contributions: You will need to pay both Class 2 and Class 4 National Insurance contributions. Class 2 is a fixed weekly amount, while Class 4 is calculated as a percentage of your profits.

Managing Tax Deductions and Allowances

Being self-employed allows you to offset certain business expenses against your taxable income, which can reduce your overall tax liability. These deductions can significantly reduce your tax liability if managed correctly.

  1. Allowable Expenses: Common allowable expenses include professional fees, training costs, travel expenses, and equipment. Ensuring these are accurately recorded and substantiated is vital.
  2. Capital Allowances: For more significant investments, such as medical equipment or a vehicle used for business purposes, you may be eligible to claim capital allowances, reducing your taxable profits over several years.
  3. Pension Contributions: Contributions to a private pension scheme can provide tax relief, lowering your overall taxable income.

Dealing with VAT

Depending on your turnover, you may need to register for VAT. If your annual taxable turnover exceeds the VAT threshold (currently £90,000), registration is mandatory.

  1. VAT Registration: Registering for VAT can allow you to reclaim VAT on business expenses, but it also means you must charge VAT on your services and submit regular VAT returns.
  2. Choosing the Right VAT Scheme: Consider the various VAT schemes available, such as the Flat Rate Scheme, which might simplify your VAT accounting.

Filing and Paying Taxes

Timely and accurate tax filings are crucial to avoid penalties and interest charges.

  1. Self-Assessment Tax Returns: As a self-employed individual, you must file an annual self-assessment tax return. Ensure all income and expenses are reported accurately to avoid issues with HMRC.
  2. Payment on Account: HMRC may require you to make advance payments towards your next tax bill, known as payments on account. These are usually due in January and July.
  3. Budgeting for Tax Payments: Set aside money regularly to cover your tax obligations. Using a separate bank account for tax savings can help manage this.

Seeking Professional Advice

Navigating the complexities of self-employment taxes can be challenging. Seeking professional advice can provide peace of mind and ensure compliance with all tax regulations.

  1. Tax Advisors and Accountants: A qualified tax advisor or accountant with experience in the medical sector can offer tailored advice, help optimise your tax position, and handle your tax filings.
  2. Software and Tools: Consider using accounting software designed for self-employed professionals to simplify record-keeping and tax calculations.


Dealing with the tax issues associated with locum tenens work requires careful planning and a thorough understanding of your obligations and opportunities. By staying informed and seeking expert advice, you can navigate these challenges effectively and ensure your financial health remains robust.

For personalised advice and assistance, consider reaching out to the ISA Consortium, a trusted advisor in the medical sector. We offer comprehensive support to help you manage your finances and tax affairs efficiently. Contact us for more information!

Book your free appointment with ISA Consortium

For more information and professional advice, please get in touch for a free appointment. We will discuss all the needs of you and your business, and head you in the right direction for future business .

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We offer all the above as part of our full Tax Services and Accounting and can also help you with Capital Gains Tax, Inheritance Tax, Retirement Planning, even filling out your Self-Assessment Tax Returns for you.


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